Frazer Corp Sells Several Products If the Company Decides to Lower Its Selling Price by Is

Multiple Choice

Frazer Corp sells several products.Information of average revenue and costs is as follows: $\begin{array}{lr}\text { Selling price per unit } & \$ 28.50 \\\text { Variable costs per unit: } & \\\text { Direct material } & \$ 5.50 \\\text { Direct manufacturing labor } & \$ 1.15 \\\text { Manufacturing overhead } & \$ 0.85 \\\text { Selling costs } & \$ 2.50 \\\text { Annual fixed costs } & \$ 125,000\end{array}$
If the company decides to lower its selling price by 12.25%,the operating income is reduced by ________.

A) $52,500
B) $50,500
C) $55,500
D) $29,500