You own a 500-unit apartment complex and charge a monthly rental rate of $1,200 per unit. When the apartments are 96% occupied, monthly operating costs total $300,000, $240,000 of which are variable costs. A nearby manufacturing plant has just announced that it is closing in the upcoming year. As a result, you anticipate occupancy will decrease to 85%. Using your knowledge of cost behavior, what is your predicted monthly operating income?

A.

$225,600

B.

$246,000

C.

$216,875

D.

$237,500

E.

None of the above.