Sunland Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $213,000; and fixed costs $71,600. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. 2$ Net income 2. Reduce variable costs to 58% of sales. 2$ Net income 3. Reduce fixed costs by $24,000. $enter a net income if the fixed costs are reduced by $24,000 Net income
Sunland Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $213,000; and fixed costs $71,600. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. 2$ Net income 2. Reduce variable costs to 58% of sales. 2$ Net income 3. Reduce fixed costs by $24,000. $enter a net income if the fixed costs are reduced by $24,000 Net income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which course of action will produce the highest net income? select an alternative with the highest net income
Alternative 1
Alternative 2
Alternative 3
Transcribed Image Text:Sunland Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs
$213,000; and fixed costs $71,600. 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 selling price by 10% with no change in total variable costs or sales volume.
Net income
2. Reduce variable costs to 58% of sales.
Net income
3. Reduce fix
costs by $24,000.
$enter a net income if the fixed costs are reduced by $24,000
Net income
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