Blossom, Inc. reports the following operating results for August: Sales $488,000 (units 6,100); variable costs $292,800; and fixed costs $109,800. Management is considering the following independent courses of action to increase net income.
1. Increase the selling price by 10%.
2. Reduce variable costs to 55% of sales.
3. Reduce fixed costs by $26,000.
Compute the net income to be earned under each alternative.
1. Increase selling price $
2. Reduce variable costs $
3. Reduce fixed costs $
Net Income
Which course of action will produce the highest net income?
will produce highest net income.
