Another problem with incremental earnings

[financier]

[FONT=&quot]GlucoseScan Incorporated (GSI) currently sells its latest glucose monitor, theGlucoscan 3000, to diabetic patients for $129. GSI plans on lowering their price next year to $99 per unit. The cost of goods sold for each Glucoscanunit is $50, and GSI expects to sell 100,000 units over the next year.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]5)Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it canincrease sales over the next year by 30% to 130,000 units. The incremental impact of this price drop onthe firms EBIT is closest to:[/FONT]
[FONT=&quot]A) a decline of 1.5 million.[/FONT]
[FONT=&quot]B) an increase of 1.5 million.[/FONT]
[FONT=&quot]C) a decline of 2.4 million.[/FONT]
[FONT=&quot]D) an increase of 2.4 million.

My thoughts on this matter.
1) 100,000*129-100,000*50=7,900,000
130,000*99-130,000*50=6,370,000
Then the difference is 1,530,000 and the answer is A.

2) [/FONT]100,000*99-100,000*50=4,900,000
130,000*99-130,000*50=6,370,000
Then the difference is 1,470,000 and the answer is B.

What I don't understand is which one of these lines show the initial incremental EBIT. The one with 7,900k or the other with 4,900k? And why?

 

[stapel]

GlucoseScan Incorporated (GSI) currently sells its latest glucose monitor, theGlucoscan 3000, to diabetic patients for $129. GSI plans on lowering their price next year to $99 per unit. The cost of goods sold for each Glucoscanunit is $50, and GSI expects to sell 100,000 units over the next year.

5)Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it canincrease sales over the next year by 30% to 130,000 units. The incremental impact of this price drop onthe firms EBIT is closest to:
A) a decline of 1.5 million.
B) an increase of 1.5 million.
C) a decline of 2.4 million.
D) an increase of 2.4 million.

My thoughts on this matter.
1) 100,000*129-100,000*50=7,900,000
130,000*99-130,000*50=6,370,000
Then the difference is 1,530,000 and the answer is A.

2) 100,000*99-100,000*50=4,900,000
130,000*99-130,000*50=6,370,000
Then the difference is 1,470,000 and the answer is B.

What I don't understand is which one of these lines show the initial incremental EBIT. The one with 7,900k or the other with 4,900k? And why?

What is the definition of "incremental impact"? What is the definition of "EBIT"? What was your reasoning for each of your computations?

Please be complete. Thank you!