Suppose Company ABC has two productsProduct A and Product B. The Income Statement in contribution margin format is shown below: Total Product A Product B Sales $800,000 $350,000 $450,000 Variable expenses 320,000 120,000 200,000 Marginal contribution 480,000 230,000 250,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 80,000 $ 90,000 $ (10,000) The company estimates that $120,000 of Product B's fixed expenses are unavoidable and will continue to be incurred even if the segment is discontinued. On the other hand, if Product B is discontinued, sales of Product A will be reduced by 12%. By how much would net operating income increase or decrease if Product B is discontinued?

Net operating income would decrease by $137,600

Net operating income would decrease by $152,000.

Net operating income would decrease by $110,000.

Net operating income would increase by $10,000.