A Company Produces 1,000 Packs of Chicken Feed Per Month

A company produces 1,000 packs of chicken feed per month. Sales price is $4 per pack. Variable cost is $1.50 per unit, and fixed costs are $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will go up from $1.50 to $1.90 per unit, but there will be no change in fixed costs. The company will price the new product at $4.25 to compete with other producers. How will this affect operating income?

A) Operating income will go down by $150 per month.
B) Operating income will go up by $250 per month.
C) Operating income will go down by $400 per month.
D) Operating income will remain unchanged.