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: $390,000 Sales (1,400 units) Manufacturing costs: Direct materials Direct labor ($15 per hour) Overhead Operating loss 180,000 110,000 120,000 ($20,000) Overhead costs are 65% variable and the remaining 35% 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 $20,000 O B. increase by $42,000 O C. decrease by $22,000 OD. decrease by $20,000