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XYZ Inc. sells a single product for $20 per unit. Variable production costs are $4 per unit. Fixed overhead costs amount $10,000 per month. Variable

XYZ Inc. sells a single product for $20 per unit. Variable production costs are $4 per unit. Fixed overhead costs amount $10,000 per month. Variable selling costs are $4 per unit. Fixed selling costs are $5,000 per month. Last month, the company produced 10,000 units and sold 8,000 units. By how much would the company's net operating income increase if variable costs were reduced by $4 per unit?

Multiple Choice

  • $32,000

  • $20,000

  • $40,000

  • $12,000

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