Victory Company makes a special kind of racing tire. Variable costs are $220, and fixed costs are
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Victory Company makes a special kind of racing tire. Variable costs are $220, and fixed costs are $30,000 per month. Victor sells 500 units per month at a price of $300. If Victory upgrades the quality of the tire, they believe they can boost the price up to $325. If so, the variable cost will go up to $230 and the fixed costs will rise by 40%.
If Victory decides to upgrade, how will it affect operating income?
A) Operating income will go down by $1,250.
B) Operating income will go down by $4,500.
C) Operating income will go up by $12,500.
D) Operating income will go up by $7,500.
Related Book For
Probability & Statistics for Engineers & Scientists
ISBN: 978-0130415295
7th Edition
Authors: Ronald E. Walpole, Raymond H. Myers, Sharon L. Myers, Keying
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