Question - Wilson Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $212,200; and fixed costs $69,000.
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.
2. Reduce variable costs to 51% of sales.
3. Reduce fixed costs by $19,700.
Which course of action will produce the highest net income?