Kearney Company, operating at full capacity, sold 110,800 units at a price of $93 per unit during 20Y5. Its income statement for 20Y5 is as follows: Sales $10,304,400 Cost of goods sold (3,658,000) Gross profit $6,646,400 Expenses: Selling expenses $1,829,000 Administrative expenses 1,085,000 Total expenses (2,914,000) Operating income $3,732,400 The division of costs between fixed and variable is as follows: Fixed Variable Cost of good sold 40% 60% Selling expenses 50% 50% Administrative expenses 70% 30% Management is considering a plant expansion program that will permit an increase of $837,000