Company produces a single product that sells for$16. Variable(flexible) costs per unit equal$11.20. The company expects the total fixed (capacityminus

related) costs to be$7,200 for the next month at the projected sales level of20,000 units. In an attempt to improveperformance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

Suppose thatcompany's management believes that a10% reduction in the selling price will result in a30% increase in sales. If this proposed reduction in selling price isimplemented, then:

A.

profit will increase by$32,000 in a month.

B.

profit will decrease by$32,000 in a month.

C.

profit will increase by$12,800 in a month.

D.

profit will decrease by$12,800 in a month.