Joes Sportsware Co. wants to see what the impact of some changes will be on the operating income of the business. They would like to increase the contribution margin by 10% per unit and the fixed costs would be decreased by 20%.

Last year they sold 3.000 units for $210,000. The variable cost was $50 per unit and the Fixed costs were $25,000.

If the proposed changes are made, what will be the amount of increase or decrease to the operating income. Prepare you answer using the incremental approach. (3 marks)