Hasbro Company makes wheels which it uses in the production of children's bikes. Hasbro's costs to produce 100,000 wheels annually are as follows:

Direct Material....$40,000

Direct Labor...60,000

Variable Manufacturing Overhead..30,000

Fixed Manufacturing Overhead...70,000

Total......$200,000

An outside supplier has offered to sell Hasbro similar wheels for $1.80 per wheel. If the wheels are purchased from the outside supplier, $25,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $55,000 per year. If Hasbro chooses to buy the wheels from the outside supplier, then the change in annual net operating income is a:

		$5,000 decrease
		$50,000 increase
		$30,000 increase
		$70,000 increase