War Eagle Beverages LLC ended $2022$ with Sales Revenue of $$12,000,000$ and COGS of $$7,000,000.$ Total Overhead, otherwise known as Operating Expenses, was $$2,500,000.$ Inventory has averaged $$1,250,000$ throughout the year and is at the same level at year$-$end. Net A$/$R is $$750,000.$ Cash$-$on$-$hand is $$800,000,$ and there are no Pre$-$Paid Expenses. Fixed Assets are $$2,500,000.$ Assume there is no interest or taxes, so EBIT and Net Income will be the same.

We are projecting that if War Eagle Beverages LLC hires an AU SCMN grad to help them optimize inventory, they could deliver the same performance in $2023$ but with $$500,000$ less investment in inventory. Sales, COGS, Cash, A$/$R$,$ Prepaid Expenses, and Fixed Assets are projected to have the same values in $2023$ as in $2022.$ Assume that inventory carrying costs $($Holding Costs$)$ are $22\%$ and that the carrying cost savings from reduced inventories will reduce Total Overhead $($Operating Expenses$)$ but that Fixed Assets will not be affected. Also, assume that the Average Inventory throughout the year will be at the same level as at year$-$end.

What is the projected change in Inventory Carrying Costs $($Holding Costs$)$ in $2023$ relative to $2022?$

Group of answer choices

Inventory Carrying Costs will decrease by $$110,000$

Inventory Carrying Costs will decrease by $$500,000$

Inventory Carrying Costs will stay the same

Inventory Carrying Costs will increase by $$110,000$

Inventory Carrying Costs will increase by $$500,000$