Yams Company reports the following operating results for the month of August: sales $400,000 (5,000 units), variable costs $240,000, and fixed costs $90,000. Management is considering the following independent courses of action to increase net income.
1. Increase the unit selling price by 10% with no change in total variable costs, fixed costs, or units sold.
2. Reduce variable costs to 55% of sales while holding fixed costs, quantity, and unit selling price constant.

Instructions
Compute the net income to be earned under each alternative. Which course of action will produce the higher net income?