Compute the net income to be earned under each alternative. Net Income 1. Increase selling price $ 2. Reduce variable costs 3. Reduce fixed costs Which course of action will produce the highest net income? Increasing selling price by 10% ,will produce higest net income. %24 %24

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sandhill, Inc. reports the following operating results for August: Sales $486,000 (units 5,400); variable costs
$291,600; and fixed costs $124,200. Management is considering the following independent courses of action to
increase net income.
1.
Increase the selling price by 10%.
2.
Reduce variable costs to 55% of sales.
3.
Reduce fixed costs by $19,000.
Compute the net income to be earned under each alternative.
Net Income
1. Increase selling price
$
2. Reduce variable costs
2$
3. Reduce fixed costs
2$
Which course of action will produce the highest net income?
Increasing selling price by 10%
will produce higest net income.
Transcribed Image Text:Sandhill, Inc. reports the following operating results for August: Sales $486,000 (units 5,400); variable costs $291,600; and fixed costs $124,200. Management is considering the following independent courses of action to increase net income. 1. Increase the selling price by 10%. 2. Reduce variable costs to 55% of sales. 3. Reduce fixed costs by $19,000. Compute the net income to be earned under each alternative. Net Income 1. Increase selling price $ 2. Reduce variable costs 2$ 3. Reduce fixed costs 2$ Which course of action will produce the highest net income? Increasing selling price by 10% will produce higest net income.
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