Barnes Company reports the following operating results for the month of August: sales $315,000 (units 5,000): variable costs$218,000; and fxed costs $70,00O. 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 income2. Reduce variable costs to 60% of sales.Net income3. Reduce fixed costs by $23,000.Net incomeWhich course of action will produce the highest net income?

The contribution margin is calculated as difference between sales and variable costs. The net income…

Barnes Companyreports the following operating results for the month of August: sales $315,000 (units 5,000): variable costs $218.000: and fond costs $70,000. Management is considering the following independent courses of action to increase net income. Compute the net income to be earmed under each alternative. 1 Increase selling price by 10% with na change in total variable costs or sales volume. Net income 2. Reduce variable costs to 60% of sales Net income 3. Reduce fxed costs by $23,000. Net income

Barnes Companyreports the following operating results for the month of August: sales $315,000 (units 5,000): variable costs $218.000: and fond costs $70,000. Management is considering the following independent courses of action to increase net income. Compute the net income to be earmed under each alternative. 1 Increase selling price by 10% with na change in total variable costs or sales volume. Net income 2. Reduce variable costs to 60% of sales Net income 3. Reduce fxed costs by $23,000. Net income

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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