Victory Tires Company Makes a Special Kind of Racing Tire

Victory Tires Company makes a special kind of racing tire.Variable costs are $220,and fixed costs are $30,000 per month.Victor sells 500 units per month at a price of $300.If the quality of the tire is upgraded,the company believes it can hike the price up to $325.If so,the variable cost will go up to $230 and the fixed costs will rise by 40%.If Victory decides to upgrade,how will operating income be affected?

A) Operating income will go down by $1,250.
B) Operating income will go down by $4,500.
C) Operating income will go up by $12,500.
D) Operating income will go up by $7,500.