Deborah Lewis, general manager of the Northwest Division of Berkshire Co., has significant authority over pricing decisions as well as programs that involve cost reduction/control. The data that follow relate to upcoming divisional operations:

Average invested capital: $15,000,000

Annual total fixed costs: $3,900,000

Variable cost per unit: $80

Number of units expected to be sold: 120,000

Assume the unit selling price is $132 and that Berkshire has a 16% imputed interest charge.

Top management will promote Deborah to corporate headquarters if her division can generate $200,000 of residual income (RI). If Deborah desires to move to corporate, what adjustment must the division do to the amount of annual total fixed costs?