Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,800. The division sales for the year were $975,200 and the variable costs were $483,000. The fixed costs of the division were $535,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:

$492,200 increase

$278,200 increase

$214,000 increase

$492,200 decrease

$278,200 decrease