Carla Vista Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs $214,000; and fixed costs $71,000. 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 57% of sales. Net income $ 3. Reduce fixed costs by $24,000. Net income $ Which course of action will produce the highest net income?
Carla Vista Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs $214,000; and fixed costs $71,000. 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 57% of sales. Net income $ 3. Reduce fixed costs by $24,000. Net income $ Which course of action will produce the highest 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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Please do not give solution in image format ? And Fast Answering Please ? And Explain Proper Step by Step.
![Carla Vista Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs
$214,000; and fixed costs $71,000. 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 57% of sales.
Net income $
3. Reduce fixed costs by $24,000.
Net income
$
Which course of action will produce the highest net income?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f532a2d-41c4-4378-bc40-36a341559f3a%2Fe8a44f50-f2de-49d6-a46f-9987ca97fea4%2Fq5bf1ir_processed.png&w=3840&q=75)
Transcribed Image Text:Carla Vista Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs
$214,000; and fixed costs $71,000. 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 57% of sales.
Net income $
3. Reduce fixed costs by $24,000.
Net income
$
Which course of action will produce the highest net income?
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