Cheaney Manufacturing produces a single product that sells for $200. Variable costs per unit equal $50. The company expects total fixed costs to be $120,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering the following alternative action. Suppose that management believes that a 20% reduction in the selling price will result in a 20% increase in sales. If this proposed reduction in selling price is implemented:

a.operating income will increase by $36,000

b .operating income will decrease by $36,000

c. operating income will increase by $44,000

d. operating income will decrease by $80,000