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Mickey Tire Company makes a special kind of racing tire. Variable costs are $230 per unit, and fixed costs are $20,000 per month. Mickey sells

Mickey Tire Company makes a special kind of racing tire. Variable costs are $230 per unit, and fixed costs are $20,000 per month. Mickey sells 300 units per month at a sales price of $350. If the quality of the tire is upgraded, the company believes it can increase the sales price to $380. If so, the variable cost will increase to $250 per unit, and the fixed costs will rise by 15%. If Mickey decides to upgrade, how will operating income be affected?

A)

Operating income will increase by $6000.

B)

Operating income will decrease by $3000.

C)

Operating income will decrease by $6000.

D)

Operating income will remain the same.

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