Roy's Raingear Produces a Single Product and Reports the Following

Multiple Choice

Roy's Raingear produces a single product and reports the following data: $\begin{array}{|l|r|l|}\hline \text { Price } & \$ 8.84 &\text { per unit } \\\hline \text { Variable cost } & \$ 6 & \text { per unit } \\\hline \text { Fixed cost } & \$ 21,000 &\text { per month } \\\hline \text { Volume } & 13,000 &\text { per month } \\\hline\end{array}$ If the company reduces its price to $7.75,it believes that the volume will go up to 15,000 units.
How would this change affect operating income?

A) It will go up by $10,670.
B) It will go up by $15,920.
C) It will go down by $10,670.
D) It will go down by $15,920.