Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow.

	Regular				Super				Total
Units		10,000				4,000				14,000
Sales revenue	$	340,000			$	960,000			$	1,300,000
Less: Cost of goods sold		260,000				480,000				740,000
Gross Margin	$	80,000			$	480,000			$	560,000
Less: Selling expenses		80,000				144,000				224,000
Operating income (loss)	$	0			$	336,000			$	336,000

Fixed manufacturing costs included in cost of goods sold amount to $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 Omar Industries eliminates Regular and uses the available capacity to produce and sell an additional 1,000 units of Super, what would be the impact on operating income?

Multiple Choice

• $12,000 increase

• $40,000 increase

• $50,000 increase

• $70,000 increase

• None of the answers is correct.