Northern Apparel Company owns two stores and management is considering eliminating the South store due to declining sales. Segmented contribution income statements are as follows and common fixed costs are allocated on the basis of sales.

		North		South		Total
Sales	$475,000		120,000		$595,000
Variable costs	242,500		69,000		311,500
Direct fixed costs	72,500		35,500		108,000
Segment margin	160,000		15,500		175,500
Allocated fixed costs	104,500		48,000		152,500
Net Income	$55,500		($32,500)		$23,000

Northern feels that if they eliminate the South store, sales in the North store will decline by 20%. If they close the South store, overall company net income will:

A. decline by $90,000.

B. decline by $85,625.

C. decline by $62,000.

D. decline by $20,000.