Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 210,000 wheels annually are as follows:

Direct material	$ 42,000
Direct labor	63,000
Variable manufacturing overhead	31,500
Fixed manufacturing overhead	69,000
Total	$205,500

An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $24,000 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 $57,900 per year.

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

$71,100 increase

$50,400 increase

$7,500 decrease

$42,000 increase