Andretti Company has a single product called a Dak. The company normally produces and sells 78,000 Daks each year at a selling price of $48 per unit. The company's unit costs at this level of activity are given below:
- Direct materials $8.90
- Direct labor 9.00
- Variable manufacturing overhead 2.10
- Fixed manufacturing overhead 5.00 ($390,000 total)
- Variable selling expenses 1.50
- Fixed selling expenses 6.60 ($514,800 total)
- Total cost per unit $33.10
A number of questions relating to the production and sale of Daks follow. Each question is independent.
Assume that Andretti Company has sufficient capacity to produce 97,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 78,000 units each year if it were willing to increase the fixed selling expenses by $126,000. Compute the Incremental net operating income. (Omit the "$" sign in your response.)
What is the incremental net operating income?