Victory Tire Company makes a special kind of racing tire. Variable costs are

$210

per unit, and fixed costs are

$20,000

per month. Victory sells

700

units per month at a sales price of

$310.

If the quality of the tire is upgraded, the company believes it can increase the sales price to

$360.

If so, the variable cost will increase to

$230

perunit, and the fixed costs will remain the same. If Victory decides to upgrade, how will it affect operating income?

A.

Operating income will increase by

$21,000.

B.

Operating income will decrease by

$14,000.

C.

Operating income will decrease by

$21,000.

D.

Operating income will increase by

$14,000.