The practice of having an outside party supply a product or service to a firm that the firm had been supplying itself is called

Outsourcing

Explanation:

Outsourcing is the process of producing the company goods and the services with the help of outsiders i.e the product should be made outside instead to produce within the company

This process is adopted for lowering the cost and maximizing the product at the highest level

Therefore in the given case, the best and appropriate option is outsourcing which fits  the given situation

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.