When sales increase by $40,000, operating income will change by $-12,000.
<h3>By how much would operating income change?</h3>
The net operating income is total revenue less direct and indirect expenses. Direct expense is variable cost and indirect expenses are fixed costs.
Operating income = total revenue - variable expenses - fixed costs
Initial operating income: 600,0000 - (0.8 x 600,000) - 130,000 = -10,000
New operating income: (600,000 + 40,000) - [0.8 x (600,000 + 40,000)] - 130,000 = 2,0000
Change in operating income: -10,000 - 2,000 = $-12,000
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