State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777 are summarized below: $310,000 Sales (1,500 units) Manufacturing costs: Direct materials Direct labor ($15 per hour) Overhead Operating loss 150,000 60,000 130,000 ($30,000) Overhead costs are 75% variable and the remaining 25% is depreciation of special equipment for model A02777 that has no resale value. If Model A02777 is dropped from the product line, operating income will O A. increase by $30,000 B. decrease by $2,500 C. increase by $32,500 D. decrease by $30,000