Henderson Farms reports the following results for the month of November: Sales (10,000 units) Variable costs Contribution margin Fixed costs Net income $600,000 1. 420,000 180,000 110,000 $70,000 Management is considering the following independent courses of action to increase net income. Increase selling price by 5% with no change in total variable costs. 2. Reduce variable costs to 66% of sales. 3. Reduce fixed costs by $10,000.
Henderson Farms reports the following results for the month of November: Sales (10,000 units) Variable costs Contribution margin Fixed costs Net income $600,000 1. 420,000 180,000 110,000 $70,000 Management is considering the following independent courses of action to increase net income. Increase selling price by 5% with no change in total variable costs. 2. Reduce variable costs to 66% of sales. 3. Reduce fixed costs by $10,000.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...
Related questions
Question
![Henderson Farms reports the following results for the month of November:
Sales (10,000 units)
Variable costs
Contribution margin
Fixed costs
Net income
$600,000
1.
420,000
180,000
110,000
$70,000
Management is considering the following independent courses of action to increase net income.
Increase selling price by 5% with no change in total
variable costs.
2. Reduce variable costs to 66% of sales.
3. Reduce fixed costs by $10,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd17b9706-e9c9-4374-9367-0a496aa440c1%2F7b9627a1-38b1-440e-8ea3-5f915d20e7ac%2Fgmakzuk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Henderson Farms reports the following results for the month of November:
Sales (10,000 units)
Variable costs
Contribution margin
Fixed costs
Net income
$600,000
1.
420,000
180,000
110,000
$70,000
Management is considering the following independent courses of action to increase net income.
Increase selling price by 5% with no change in total
variable costs.
2. Reduce variable costs to 66% of sales.
3. Reduce fixed costs by $10,000.
![Calculate net income for the above courses of action.
Course
1. Increase selling price $
2. Reduce variable cost
Reduce fixed cost
69
Best course of action is
$
tA
Net Income
If maximizing net income is the objective, which is the best course of action?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd17b9706-e9c9-4374-9367-0a496aa440c1%2F7b9627a1-38b1-440e-8ea3-5f915d20e7ac%2F8q1apup_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Calculate net income for the above courses of action.
Course
1. Increase selling price $
2. Reduce variable cost
Reduce fixed cost
69
Best course of action is
$
tA
Net Income
If maximizing net income is the objective, which is the best course of action?
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