Refer to 2.30. Suppose your boss at Lady MacBath is considering some alternative plans and would like your input on the following three independent alternatives:

1 Increase the selling price per bottle by \(\$ 3\).

2 Decrease the variable cost per bottle by \(\$ 2\) by purchasing an equally effective, but less 'environmentally friendly' solvent from your supplier.

3 Decrease the total fixed cost by \(\$ 1260\).

Data from in Refer to 2.30

Assume again that Lady MacBath currently sells bottles of dry cleaning solvent for \(\$ 10\) each, the variable cost for each bottle is \(\$ 4\) and the total fixed cost for the year is \(\$ 3600\).

Required:

How many bottles would Lady MacBath have to sell to break even under each of the alternatives? Using this accounting information alone, write your boss a memo in which you recommend an alternative. Your boss would like to earn a profit of \(\$ 4320\). How many bottles would Lady MacBath have to sell to earn a profit of \(\$ 4320\) under each of the alternatives? Which of the three alternatives would you recommend to your boss? Is this consistent with your recommendation in (a)? Why or why not? What other issues did you consider when making your recommendation?