Answer the Following Questions Using the Information Below

Answer the following questions using the information below:
Ghan Manufacturing produces a single product that sells for $80.Variable costs per unit equal $32.The company expects total fixed costs to be $72 000 for the next month at the projected sales level of 2000 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.
-Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales.If this proposed reduction in selling price is implemented:

A) operating profit will decrease by $8000.
B) operating profit will increase by $8000.
C) operating profit will increase by $16 000.
D) operating profit will decrease by $16 000.

Correct Answer:

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