Bylla has a shoes and a shirts division. The company reported the following segmented income statementfor last month:

		Division
	Total	Shoes	Shirts
Sales	$4,200,000	$3,000,000	$1,200,000
Variable expenses	2,000,000	1,500,000	500,000
Contribution Margin	2,200,000	1,500,000	700,000
Fixed Expenses	2,200,000	1,300,000	900,000
Net operating income (loss)	0	200,000	(200,000)

The company predicts that$250,000of 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 ShirtsDivision will additionallycausea20% 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 $370,000
• Decrease by $330,000
• Decrease by $350,000
• Increase by $370,000