Correo, Inc. is evaluating a potential addition to its product line. They expect that the costs and revenue for the new product would be:

Annual sales	3,000 units
Selling price per unit	$309
Variable costs per unit:
Production	$130
Selling	$50
Avoidable fixed cost per year:
Production	$51,000
Selling	$75,000
Unavoidable allocated fixed corporate costs per year	$54,000

If the new product is added, then sales of two existing products will be expected to decline. Correo expects the contribution margin of the two existing products to drop by $50,000 and $28,000 respectively.

If the new product is added next year, the increase in net operating income resulting from this decision would be:

A

$387,000

B

$261,000

C

$183,000

D

$207,000