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HiTech manufactures two products: Regular and Super. Results of operations for 2021 follow. Units Regular Super Total Sales 10,000 3,700 13,700 Less: COGS $240,000 $740,000
HiTech manufactures two products: Regular and Super. Results of operations for 2021 follow. Units Regular Super Total Sales 10,000 3,700 13,700 Less: COGS $240,000 $740,000 $980,000 Gross margin (180,000) (481,000) (661,000) $60,000 $259,000 $319,000 Less: Selling expenses 60,000 134,000 194,000 Operating income $125,000 $125,000 Fixed manufacturing costs included in cost of goods sold are $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed. If HiTech eliminates Regular and uses the available capacity to produce and sell an additional 1,500 units of Super, what would be the impact on operating income? A. $28,000 increase B. $45,000 increase C. $55,000 increase D. $85,000 increase E. None of the above answers is correct
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