A company produces 1,000 packages of cat food per month. The sales price is $4.00 per pack. Variable cost is $1.60 per unit, and fixed costs are $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.60 to $1.80 per unit, and fixed costs will increase by 10%. The company will price the new product at $8 per pack. How will this affect operating income?

A.

Operating income will remain unchanged.

B.

Operating income will increase by $3,620 per month.

C.

Operating income will decrease by $2,020 per month.

D.

Operating income will decrease by $3,620 per month.