Melvin Electronics developed the following direct labor standards: Standard hour .0.25 director labor hour per unit of finished good Standard rate $10.50 per direct labor hour The information for May is as follows: Actual production volume. finished good 35,000 units of 10,500 direct labor Actual direct labor hours hours Actual direct labor cost...... $113,400 Melvin's direct labor rate variance for May is: $3,150 favorable $3,150 unfavorable $6,300 favorable $6,300 unfavorable The data for Cosmo Inc. is as below: Sales Variable expenses Fixed expenses Net operating income Mall Store $80,000 32,000 20,000 Town Store $120,000 84,000 40,000 $28,000 -$4,000 The managers are considering whether to close the Town Store. If the Town Store were to be closed, 70% of Town Store's fixed expenses will be avoided, but Mall Store sales will decrease by 15%. By how much would closing the Town Store affect the company's net operating income? Net operating income will decrease by $15,200 Net operating income will decrease by $8,000 Net operating income will increase by $4,000 Net operating income will increase by $16,000