Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 240,000 wheels annually are as follows:

Direct material	$ 48,000
Direct labor	72,000
Variable manufacturing overhead	36,000
Fixed manufacturing overhead	74,000
Total	$230,000

An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $29,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $76,600 per year.

If Talboe chooses to buy the wheel from the outside supplier, then the change in annual net operating income is a:

	$7,000 decrease
	$69,600 increase
	$72,400 increase
	$48,000 increase