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Cullumber Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $222,000; and fixed costs $71,900. 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 60% of sales. Net income $ 3. Reduce fixed costs by $19,000. Net income 330,000 $ 180000 52900 Which course of action will produce the highest net income? Alternative 3

Cullumber Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $222,000; and fixed costs $71,900. 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 60% of sales. Net income $ 3. Reduce fixed costs by $19,000. Net income 330,000 $ 180000 52900 Which course of action will produce the highest net income? Alternative 3

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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Cullumber Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $222,000; and fixed costs $71,900. 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 60% of sales. Net income $ . Reduce fixed costs by $19,000. Net income 330,000 $ 180000 52900 Which course of action will produce the highest net income? Alternative 3+
Transcribed Image Text:Cullumber Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $222,000; and fixed costs $71,900. 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 60% of sales. Net income $ . Reduce fixed costs by $19,000. Net income 330,000 $ 180000 52900 Which course of action will produce the highest net income? Alternative 3+
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