$1)$ Englehart, Inc. reports the following operating results for the month of August: Sales $$450,000($units $5,000)$; variable costs $$280,000$; and fixed costs $$115,000.$ 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 $65\%$ of sales.

$3.$ Reduce fixed costs by $$15,000.$

Instructions

$($a$)$ Calculate Net Income for each independent case by applying the above changes. $($Show your work$)$

$($b$)$ If maximizing net income is the objective, which is the best course of action?

$($a$)$

$1.$ Increase Selling Price

Revised sales

Variable costs

Contribution margin

Fixed costs

Net income

$2.$ Reduce Variable Costs

Sales

Revised Variable costs

Contribution margin

Fixed costs

Net income

$3.$ Reduce Fixed Costs

Sales

Variable costs

Contribution margin

Revised Fixed costs

Net income