Supersonic Tire Company makes a special kind of racing tire. Variable costs are $220 per unit, and fixed costs are $30,000 per month. Supersonic sells 500 units per month at a sales price of $300. If the quality of the tire is upgraded, the company believes it can increase the price to $325. If so, the variable cost will increase to $230 per unit, and the fixed costs will rise by 40%. If Supersonic decides to upgrade, how will operating income be affected?
A) Operating income will decrease by $12,500.
B) Operating income will decrease by $4500.
C) Operating income will increase by $12,500.
D) Operating income will increase by $40.
B) Operating income will decrease by $4500.
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a. mission statement b. core values c. house rules d. case studies
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