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Problem 12-18 Relevant Cost Analysis in a Variety of Situations [L012-2, LO 12-3, LO 12-4] Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 Daks each year at a selling price of $46 per unit. The company's unit costs at this level of activity are given below: Direct materials 8.50 Direct labor 9.00 Variable manufacturing overhead 3.50 4.00 ($336,000 total) 2.70 Fixed manufacturing overhead Variable selling expenses 4.50 ($378,000 total) Fixed selling expenses 32.20 Total cost per unit A number of questions relating to the production and sale of Daks follow. Each question is independent. Required 1-a. Assume that Andretti Company has sufficient capacity to produce 105,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 84,000 units each year if it were willing to increase the fixed selling expenses by $140,000. Calculate the incremental net operating income. (Round all dollar amounts to 2 decimal places. Increased sales in units Contribution margin per unit Incremental contribution margin Less added fixed selling expense Incremental net operating income 0.00 1-b. Would the increased fixed selling expenses be justified? No O Yes