Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super TotalUnits 10,000   3,700   13,700 Sales revenue$240,000  $740,000  $980,000 Less: Cost of goods sold 180,000  $481,000   661,000 Gross Margin$60,000  $259,000  $319,000 Less: Selling expenses 60,000   134,000   194,000 Operating income (loss)$0  $125,000  $125,000 Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.Disregard the information in the previous question. If Omar Industries eliminates Regular and uses the available capacity to produce and

sell an additional 1,500 units of Super, what would be the impact on operating income?

A. $85,000 increase
B. $55,000 increase
C. $28,000 increase
D. $45,000 increase
E. None of the answers is correct.


Answer: B

Business

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