Barnes Company reports the following operating results for the month of August: Sales $325,000 (units 5,000); variable

Question:

Barnes Company reports the following operating results for the month of August:
Sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 10% with no charge in total variable costs or sales volume.
2. Reduce variable costs to 58% of sales.
3. Reduce fixed costs by $15,000.
Instruction
Compute the net income to be earned under each alternative. Which course of action will produce the highest net income.
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Managerial Accounting Tools for Business Decision Making

ISBN: 978-1119036432

7th edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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