Boulangerie Bouffard Expects to Sell 1 Million Croissants Next Year

Multiple Choice

Boulangerie Bouffard expects to sell 1 million croissants next year for $1.25 each. Variable cost of a croissant is $0.75. Fixed costs are $150,000, depreciation $200,000 and the tax rate is 25%. If the bakery can increase the price of a croissant to $1.50 and all other variables remain the same, free cash flow will increase by

A) $37,500.
B) $150,000.
C) $187,500.
D) $250,000.