Commercial Carpets manufactures custom mats. The details on its standard run of a 1 m x 2 m mat is as follows:

Quantity	Unit Selling Price	Unit Variable Cost	Fixed Costs
290	$59	$34	$2,000

The production manager believes a $700 fixed cost investment would reduce variable costs by $2/unit. Assuming no change to sales volume or selling price, should the investment be made?

Question 9

a.

No. Operating income will decrease by $120

b.

Yes. The contribution margin will increase by $580 andVariable costs will decrease by $580

c.

Yes. Variable costs will decrease by $580

d.

Yes. The contribution margin will increase by $580