Bowmanville Manufacturing Company Is Studying the Profitability of a Change

Multiple Choice

Bowmanville Manufacturing Company is studying the profitability of a change in operation and has gathered the following information: $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Current } \\\text { Operation }\end{array} & \begin{array} { c } \text { Anticipated } \\\text { Operation }\end{array} \\\hline \text { Fixed costs } & \text { S38,000 } & \$ 48,000 \\\hline \text { Selling price } & \text { S16 } & \$ 22 \\\hline \text { Variable cost } & \text { S10 } & \$ 12 \\\hline \text { Sales (units) } & 9,000 & 6,000 \\\hline\end{array}$ Should Bowmanville make the change?

A) Yes, the company will be better off by $6,000.
B) No, because sales will drop by 3,000 units.
C) No, because the company will be worse off by $4,000.
D) No, because the company will be worse off by $22,000.
E) It is impossible to judge because additional information is needed.