A historic museum charges £35.00\pounds 35.00£35.00 + VAT (payable at 20%) for an annual pass, giving a total selling price of £42\pounds 42£42. The monthly running costs of the museum are £180,000\pounds 180,000£180,000, with 15,000 15,000\,15,000 visitors purchasing this pass each month.
In response to an economic downturn, the government announced a temporary reduction in the rate of VAT charged to cultural attractions from 20% to 5%. If the museum continued to price the pass at £42 \pounds 42\,£42 and visitor numbers remained constant, what would the impact on its monthly profit be?
Increases by £75,000\pounds 75,000£75,000
Increases by £120,000\pounds 120,000£120,000
Increases by £15,000\pounds 15,000£15,000
Remains unchanged
