Norton company reports the following operating results for the month of August: sales $310,000 (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 change in total variable costs or sales volume, 2) reduce variable costs to 58% of sales, 3) reduce fixed costs by $20,000.
Instructions
Compute the net income to be earned under each alternative. which course of action will produce the highest net income?