Nicoles Manufacturing has the following unit costs of manufacturing and selling Product K at the planned activity level of 4,000 units per month:

Amount

Direct material $7.10

Direct labour 2.00

Variable manufacturing overhead 1.50

Fixed manufacturing overhead 1.75

Variable selling costs 4.60

Fixed selling costs 1.25

Ignore income taxes.

Required:

Calculate the expected yearly operating income if the volume can be increased by 20% when the selling price is reduced to $20.