Thomas Company buys and sells a product that has a variable cost per unit of $$25.$ Thomas$$ fixed costs amount to $$84,000.$ The product sells for $$30$ each. Thomas currently expects to make and sell $32,000$ 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

Multiple Choice

increase by $$10,000.$

Incorrect

decrease by $$15,000.$

decrease by $$25,000.$

increase by $$5,000.$