Thomas Co. buys and sells a product that has a variable cost per unit of $18. Thomas fixed costs amount to $48,000. The product sells for $22 each. Thomas currently expects to make and sell 14,000 units. Management has an opportunity to reduce its variable cost per unit by one dollar. If Thomas passes the savings on to its customers by lowering the sales price, the lower sales price will increase sales by 1,000 units. If management implements the new pricing strategy, profitability will

increase by $8,000.

decrease by $12,000

decrease by $20,000.

increase by $4,000.