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

 

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Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $215,000; and fixed costs $71,500. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income 38.500 2. Reduce variable costs to 60% of sales. Net income $ 71.000 3. Reduce fixed costs by $21,000. Net income 59500 Which course of action will produce the highest net income? Alternative 1 Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $215,000; and fixed costs $71,500. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income 38.500 2. Reduce variable costs to 60% of sales. Net income $ 71.000 3. Reduce fixed costs by $21,000. Net income 59500 Which course of action will produce the highest net income? Alternative 1

Answer rating: 100% (QA)

Sales 325000 Number of units sold 5000 Variable costs 215000 Fixed costs 71500 Selling price per u... View the full answer