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 sales will fall by 50,000 croissants.Free cash flow will increase or decrease by:

A) $131,250 increase.
B) $37,500 increase.
C) $75,000 decrease.
D) $250,000 increase.