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Bonita Company reports the following operating results for the month of February: sales $828,000 (units 13,800); variable costs $442,980; and fixed costs $190,000. Management is considering the following independent courses of action to increase net income. 1. 2 (a) Increase selling price by 2.7% with no change in total variable costs or units sold. Reduce variable costs to 49.90% of sales.

Bonita Company reports the following operating results for the month of February: sales $828,000 (units 13,800); variable costs $442,980; and fixed costs $190,000. Management is considering the following independent courses of action to increase net income. 1. 2 (a) Increase selling price by 2.7% with no change in total variable costs or units sold. Reduce variable costs to 49.90% of sales.

FINANCIAL ACCOUNTING
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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Bonita Company reports the following operating results for the month of February: sales $828,000 (units 13,800); variable costs $442,980; and fixed costs $190,000. Management is considering the following independent courses of action to increase net income. 1. 2 (a) Increase selling price by 2.7% with no change in total variable costs or units sold. Reduce variable costs to 49.90% of sales. Compute the net income to be earned under each alternative. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.) Net Income $ Alternative #1 $ Alternative #2 Which course of action will produce the highest net income? will produce the highest net income.
Transcribed Image Text:Bonita Company reports the following operating results for the month of February: sales $828,000 (units 13,800); variable costs $442,980; and fixed costs $190,000. Management is considering the following independent courses of action to increase net income. 1. 2 (a) Increase selling price by 2.7% with no change in total variable costs or units sold. Reduce variable costs to 49.90% of sales. Compute the net income to be earned under each alternative. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.) Net Income $ Alternative #1 $ Alternative #2 Which course of action will produce the highest net income? will produce the highest net income.
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