Castillo Corporation has provided you with the following budgeted income statement for one of its products:

Sales revenue	$700,000
Variable costs	(430,000)
Contribution margin	$270,000
Fixed costs	(320,000)
Operating loss	($50,000)

Castillo has just encountered environmental problems with the product and will be forced to drop the product line altogether. Castillo will be able to eliminate 60% of the fixed costs. What will be the impact on operating income of the company?

A. Operating income will increase by $192,000. B. Operating income will decrease by $78,000. C. Operating income will increase by $78,000. D. Operating income will decrease by $192,000.