Answer:
Change in profit is Nil
Explanation:
<em>To determine whether to outsource the production of product X or not, we would compare the variable cost internal production to the external</em> <em>purchase price. And then adjust  the net figure for the fixed costs.
</em>
<em>For a make or buy decision the relevant cash flows include </em>
1. the differential variable cost of the two options  
2. savings from avoidable fixed costs associated with internal production 
                                                                                                   $
Variable cost internal production (2+7+5)                             14
External buy in price                                                               <u>12</u>    
Savings per unit  of bought from outside                            <u> 2   </u>
Savings on  1000 units (2× 1,000)                                         2,000
Unavoidable  fixed cost (2  ×    1,000)                                 <u> (2,000)</u>     
Net change in profit                                                             <u>       Nil   </u> 
<em>Note we assume that the fixed overhead is unavoidable. That is it will still be incurred whether or the product is outsourced     </em>