Fine Loungers is in the process of preparing a production cost budget for August. Actual costs in July for $400$ chaise lounge chairs were:

Materials cost $ $10,000$

Labor cost $4,800$

Rent $15,000$

Depreciation $20,000$

Other fixed costs $5,000$

Total $$54,800$

Each chair was sold for $$160$ in July. Management estimates that sales will increase to $600$ chairs during August if the company lowers the selling price to $$120$ per chair. Materials and labour are the only variable costs. How much is the incremental revenue associated with the price reduction?

Question $4$ Answer

a$.$

$$7,400$

b$.$

$$600$

c$.$

$$8,000$

d$.$

$$9,800$