g The Talbot Corporation makes wheels that it uses in the production of bicycles. Talbot's costs to produce 260,000 wheels annually are: Direct materials $52,000 Direct labor $78,000 Variable manufacturing overhead $39,000 Fixed manufacturing overhead $76,000 An outside supplier has offered to sell Talbot similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $31,000 of annual fixed overhead could be avoided and the facilities now being used could be rented to another company for $88,600 per year. Direct labor is a variable cost. If Talbot chooses to buy the wheel from the outside supplier, then annual net operating income would: