Erin Company reports the following operating results for the month of - 14344

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Question 4

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Erin Company reports the following operating results for the month of August: Sales $423,000 (units 4,700); variable costs $197,810; and fixed costs $56,260. Management is considering the following independent courses of action to increase net income.

  1. Increase selling price by 10% with no change in total variable costs.
  2. Reduce variable costs to 63% of sales.
  3. Reduce fixed costs by $12,260.

Instructions

Compute the net income to be earned under each alternative.

Which course of action will produce the highest net income?

 

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