L&M Manufacturing Produces a Single Product That Sells for $16

Multiple Choice

L&M Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit equal $11.20. The company expects the total fixed (capacity-related) costs to be $7,200 for the next month at the projected sales level of 20,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose that L&M Manufacturing's management believes that a 10% reduction in the selling price will result in a 30% increase in sales.If this proposed reduction in selling price is implemented,then:

A) profit will decrease by $12,800 in a month.
B) profit will increase by $12,800 in a month.
C) profit will decrease by $32,000 in a month.
D) profit will increase by $32,000 in a month.