Blossom Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $210,000; and fixed costs $70,000. 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 unit selling price by 10% with no change in total variable costs or sales volume. Net income $ 2. Reduce variable costs to 55% of sales. Net income $ 3. Reduce fixed costs by $18,000. Net income $
Blossom Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $210,000; and fixed costs $70,000. 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 unit selling price by 10% with no change in total variable costs or sales volume. Net income $ 2. Reduce variable costs to 55% of sales. Net income $ 3. Reduce fixed costs by $18,000. Net income $
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11E
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![Blossom Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs
$210,000; and fixed costs $70,000. 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 unit selling price by 10% with no change in total variable costs or sales volume.
Net income $
2. Reduce variable costs to 55% of sales.
Net income
$
3. Reduce fixed costs by $18,000.
Net income
+A
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51c6d77c-f3bc-4b32-8c2f-da34fc78271c%2F91e0bb9b-c9a2-4304-a4c6-0ff654bcda49%2Fdypjq3e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Blossom Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs
$210,000; and fixed costs $70,000. 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 unit selling price by 10% with no change in total variable costs or sales volume.
Net income $
2. Reduce variable costs to 55% of sales.
Net income
$
3. Reduce fixed costs by $18,000.
Net income
+A
$
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Step 1: Introduction to the cost, volume, and profit analysis
VIEWStep 2: Working notes related to computation of the net income
VIEWStep 3: Computation of the net income under the case one
VIEWStep 4: Computation of the net income under the case two
VIEWStep 5: Computation of the net income under the case three
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