Dennis Sports produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:

T-SHIRTS SWEATSHIRTS

Production and sales volume 60,000 units 35,000 units

Selling price $16.00 $29.00

Direct material $ 2.00 $ 5.00

Direct labor $ 4.50 $ 7.20

Manufacturing overhead $ 2.00 $ 3.00

Gross profit $ 7.50 $13.80

Selling and administrative $ 4.00 $ 7.00

Operating profit $ 3.50 $ 6.80

What is the projected decline in operating income if the direct materials costs of T-Shirts increase to $3.50 per unit and direct labor costs of Sweatshirts increase to $13.00 per unit?

A) $293,000

B) $90,000

C) $203,000

D) $473,000