Due to erratic sales of its sole product, PEM Inc. has been experiencing financial difficulties. Its most recent financial information includes the following:

Sales $396,000 (13,200 units x $30 per unit)

Variable expenses 198,000

Fixed expenses 220,500

Net operating income (22,500)

By further automation, the company could reduce variable expenses by $4 per unit. However, fixed expenses would increase by $25,000. What would its new net operating income be as a result of this initiative if nothing else changes?