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Carla Vista Company reports the following operating results for the month of August: sales $357,000 (units 5,100), variable costs $256,000, and fixed costs $99,000. Management is considering the following independent courses of action to increase net income. 1.   Increase selling price by 10% with no change in total variable costs or units sold. 2.   Reduce variable costs to 65% of sales. Compute the net income to be earned under each alternative. 1.   Net Income   $  2.   Net Income   $

Carla Vista Company reports the following operating results for the month of August: sales $357,000 (units 5,100), variable costs $256,000, and fixed costs $99,000. Management is considering the following independent courses of action to increase net income. 1.   Increase selling price by 10% with no change in total variable costs or units sold. 2.   Reduce variable costs to 65% of sales. Compute the net income to be earned under each alternative. 1.   Net Income   $  2.   Net Income   $

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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Carla Vista Company reports the following operating results for the month of August: sales $357,000 (units 5,100), variable costs $256,000, and fixed costs $99,000. Management is considering the following independent courses of action to increase net income.

1.
   Increase selling price by 10% with no change in total variable costs or units sold.
2.
   Reduce variable costs to 65% of sales.


Compute the net income to be earned under each alternative.

1.
  
Net Income
  
$ 
2.
  
Net Income
  
$ 
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