Inc. has a shoes and a shirts division. The company reported the following segmented income statement for last month:

The company predicts that $150,000 of the fixed expenses being charged to the Shirts Division are allocated costs that will continue even if the Shirts Division is eliminated. The elimination of the Shirts Division will additionally cause a 30% drop in Shoes Division sales. If the company shuts down its Shirts Division, by how much will the company's overall net operating income change?

Multiple Choice

Increase by $410,000

Decrease by $410,000

Decrease by $400,000

Increase by $380,000

\begin{tabular}{lrrr} & & \multicolumn{2}{c}{ Division } \\ \cline { 3 - 4 } & Total & Shoes & Shirts \\ Sales & $4,200,000 & $3,000,000 & $1,200,000 \\ Variable expenses & 2,000,000 & 1,500,000 & 500,000 \\ Contribution Margin & 2,200,000 & 1,500,000 & 700,000 \\ Fixed Expenses & 2,200,000 & 1,300,000 & 900,000 \\ Net operating income (loss) & 0 & 200,000 & (200,000) \end{tabular}