ACE-186 Inc. has a shoes and a shirts division. The company reported the following segmented income statement for last month:

Division TotalShoesShirtsSales$4,200,000$3,000,000$1,200,000Variable expenses2,000,0001,500,000500,000Contribution Margin2,200,0001,500,000700,000Fixed Expenses2,200,0001,300,000900,000Net operating income (loss)0200,000(200,000)

The company predicts that $50,000 of the fixed expenses being charged to the Shirts Division are allocated costs that will continue even if the Shirts Division is eliminated. The elimination of the Shirts Division will additionally cause a 10% drop in Shoes Division sales. If the company shuts down its Shirts Division, by how much will the company's overall net operating income change?

Multiple Choice

Decrease by $0

Increase by $30,000

Decrease by $30,000

Decrease by $30,000