Christina Dees works as the founder and CEO of Dees's Compassion Clinics and Dispensary, a cannabis startup. The business is generated a sales revenue of $1,000,000 per year (5000 ounces at an average price of $200 per ounce). The cost of goods sold is $700,000. Selling, general, and administrative expenses are $100,000. Depreciation expense per year is $25,000. Business generates an operating profit of $175,000. Christina hires Robin Szewczak as marketing director to improve sales and profitability. Robin argues that Christina needs to advertise the product more to improve market share. Christina decides to double the money spent on selling, general, and administrative expenses to $200,000 and is able to sell 5500 ounces at an average price of $200 per ounce. If there is no change in any other variable, what happens to operating income?

1. Operating income rises by $25,000
2. Operating income does not change
3. Operating income declines by $10,000
4. Operating may increase or decline

Group of answer choices

A

B

C

D