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Erin Company reports the following operating results for the month of August: Sales $456,000 (units 5,700); variable costs $291,840; and fixed costs $96,830. Management is considering the following independent courses of action to increase profit. 1. Increase selling price by 10% with no change in total variable costs. 2. Reduce variable costs to 58% of sales. 3. Reduce fixed costs by $11,570. Compute the profit to be earned under each alternative. (Round all answers to O decimal places.) 1. Profit $ 2. Profit $ 3. Profit $ Which course of action will produce the highest profit? Save for later

Erin Company reports the following operating results for the month of August: Sales $456,000 (units 5,700); variable costs $291,840; and fixed costs $96,830. Management is considering the following independent courses of action to increase profit. 1. Increase selling price by 10% with no change in total variable costs. 2. Reduce variable costs to 58% of sales. 3. Reduce fixed costs by $11,570. Compute the profit to be earned under each alternative. (Round all answers to O decimal places.) 1. Profit $ 2. Profit $ 3. Profit $ Which course of action will produce the highest profit? Save for later

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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Erin Company reports the following operating results for the month of August: Sales $456,000 (units 5,700); variable costs $291,840; and fixed costs $96,830. Management is considering the following independent courses of action to increase profit. 1. Increase selling price by 10% with no change in total variable costs. 2. Reduce variable costs to 58% of sales. 3. Reduce fixed costs by $11,570. Compute the profit to be earned under each alternative. (Round all answers to O decimal places.) 1. Profit $ 2. Profit $ 3. Profit $ Which course of action will produce the highest profit? Save for later
Transcribed Image Text:Erin Company reports the following operating results for the month of August: Sales $456,000 (units 5,700); variable costs $291,840; and fixed costs $96,830. Management is considering the following independent courses of action to increase profit. 1. Increase selling price by 10% with no change in total variable costs. 2. Reduce variable costs to 58% of sales. 3. Reduce fixed costs by $11,570. Compute the profit to be earned under each alternative. (Round all answers to O decimal places.) 1. Profit $ 2. Profit $ 3. Profit $ Which course of action will produce the highest profit? Save for later
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