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: sales (1,100 units) $370,000 manufacturing costs: direct materials 160,000 direct labor ($15 per hour) 80,000 overhead 150,000 operating loss ($20,000) 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
a. decrease by $20,000
b. increase by $37,500
c. decrease by $17,500
d. increase by $20,000