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Which if the reduction in selling price is implemented

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Problem 1: Charriott sells a single product at $185 per unit. The firm's most recent income statement revealed unit sales of 3,200, variable costs per unit of $60, and fixed costs of $240,000. Management believes that a 20% drop in selling price will boost sales by 20%. If this reduction in selling price is implemented,

Option 1: Operating income will increase by $62,080.

Option 2: Operating income will decrease by $118,400.

Option 3: Operating income will decrease by $62,080.

Option 4: Operating income will increase by $56,320.

Option 5: Operating income will decrease by $174,720.

Reference no: EM133001142

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