On October 1, 2011, Eagle Company forecasts the purchase of inventory from a British supplier on February 1, 2012, at a price of 100,000 British pounds. On October 1, 2011, Eagle pays $1,800 for a three-month call option on 100,000 pounds with a strike price of $2.00 per pound. The option is considered to be a cash flow hedge of a forecasted foreign currency transaction. On December 31, 2011, the option has a fair value of $1,600. The following spot exchange rates apply:

What is the amount of Cost of Goods Sold for 2012 as a result of these transactions? Please provide detailed calculation.

A.

$200,000.

B.

$195,000.

C.

$201,000.

D.

$202,600.

E.

$203,000.