Profit rises by the full increase in contribution margin when fixed costs stay constant.

Steps:

• Calculate current contribution margin: 40% of $100,000 =$40,000.
• Determine current profit: $40,000 -$30,000 fixed costs = $10,000.
• Find new sales revenue: $100,000 × 1.20 =$120,000.
• Compute new contribution margin: 40% of $120,000 =$48,000; new profit: $48,000 -$30,000 = $18,000; profit increase:$18,000 - 8,000.

Why A is correct:

• Contribution margin ratio means profit increases exactly by the additional contribution from higher sales, per break-even analysis formula: Profit = (CM ratio × Sales) - Fixed costs.

Why the others are wrong:

• B assumes profit equals new contribution margin, ignoring fixed costs.
• C adds new contribution to current profit without subtracting fixed costs.
• D treats the entire sales increase as profit, overlooking the 40% ratio and fixed costs.

Final answer: A