Andy Manufacturing produces a single product that sells for $80. Variable costs per unit equal $40. The company expects total fixed costs to be $82,000 for the next month at the projected sales level of 2,700 units. Attempting to improve performance, management is considering several alternative actions. Each situation is to be evaluated separately. Suppose that management believes that an 11% reduction in the selling price will result in an 11% increase in unit sales. If this proposed reduction in selling price is implemented: (Do not round intermediary calculations, and round the final answer to the nearest whole number.)

Note: This question is not complete as the options are omitted. The options are therefore provided to complete the question before answering the question as follows:

A) operating income will decrease by $14,494

B) operating income will increase by $9,266

C) operating income will decrease by $23,760

D) operating income will increase by $14,494

The explanation of the answer is now provided as follows:

Note: See the attached excel file for the Determination of Operating Income BEFORE and AFTER the 11% reduction in the selling price using Contribution Format Income Statement.

From the attached excel file, we have:

Operating Income BEFORE 11% reduction in selling price = $26,00

Operating Income AFTER 11% reduction in selling price = $11,506

Decrease in operating income = Operating Income BEFORE 11% reduction in selling price - Operating Income AFTER 11% reduction in selling price = $26,00 - $11,506 = $14,494

Therefore, the correct option is A) operating income will decrease by $14,494.