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How will this affect operating? income

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Question - A company produces? 1,000 packages of cat food per month. The sales price is? $3.90 per pack. Variable cost is? $1.50 per? unit, and fixed costs are? $1,700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from? $1.50 to? $1.90 per? unit, and fixed costs will increase by? 10%. The company will price the new product at? $7 per pack. How will this affect operating? income?

A. Operating income will remain unchanged.

B. Operating income will increase by? $2,530 per month.

C. Operating income will decrease by? $1,030 per month.

D. Operating income will decrease by? $2,530 per month.

Reference no: EM133048298

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