Spotless Naturals manufactures bulk quantities of cleaning fluids.It currently sells 1100 containers a month at a sales price of $20.00 per unit.If a new fragrance is added,$24.00 per unit could be charged for the improved product.It would cost a total of $800 per month to make that alteration.Operating income would ________.

Question

Quizplus · Accepted Answer

The current total revenue is 1100 x $20 = $22,000.
If the new fragrance is added, the new total revenue would be 1100 x $24 = $26,400.
The increase in revenue would be $26,400 - $22,000 = $4,400.
However, there is a cost of $800 to make the alteration.
Therefore, the increase in operating income would be $4,400 - $800 = $3,600.
Therefore, the answer is C.

Spotless Naturals Manufactures Bulk Quantities of Cleaning Fluids