Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows:

Sales	$	1,080,000
Variable expenses		540,000
Contribution margin		540,000
Fixed expenses		200,000
Net operating income	$	340,000

5. The sales manager is convinced that a 11% reduction in the selling price, combined with a $61,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented?