)

A small business produces a single product and reports the following data:

Sales price	$8.50	per unit
Variable cost	$5.25	per unit
Fixed cost	$22,000	per month
Volume	10,000	units per month

The company believes that the volume will go up to 12,000 units if the company reduces its sales price to $7.50. How would this change affect operating income?

21) ______

	A) It will decrease by $10,500.
	B) It will decrease by $5500.
	C) It will increase by $10,500.
	D) It will increase by $5500.