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What will be the impact on abcs profit

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Question - ABC Company needs 1,000 components for one of its products. It can subcontract production of the components to the XYZ Company for $40 each. The business can produce the components internally for a total variable cost of $30 per component. ABC Company has spare capacity. What will be the impact on ABC's profit if they choose to subcontract production of the component to XYZ Company?

a. $10,000 decrease

b. $10,000 increase

c. $1,000 decrease

d. $1,000 increase

Reference no: EM133002335

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