1.Variable costs as a percentage of sales for Lemon Inc. are 78%, current sales are $524,000, and fixed costs are $192,000. How much will operating income change if sales increase by $38,300?

a.$8,426 decrease

b.$8,426 increase

c.$29,874 increase

d.$29,874 decrease

2.Strait Co. manufactures office furniture. During the most productive month of the year, 3,700 desks were manufactured at a total cost of $84,000. In the month of lowest production, the company made 1,300 desks at a cost of $64,500. Using the high-low method of cost estimation, total fixed costs are

a.$19,500

b.$53,919

c.$84,000

d.$64,500