a) Barnes Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $225,000; and fixed costs $71,400. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume.

$

2. Reduce variable costs to 56% of sales.

$

3. Reduce fixed costs by $24,000.

$

Which course of action will produce the highest net income

b) PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent 60% of its sales and provide a contribution margin ratio of 25%. Brake repair represents 40% of its sales and provides a 45% contribution margin ratio. The companys fixed costs are $15,589,200 (that is, $77,946 per service outlet).

Calculate the dollar amount of each type of service that the company must provide in order to break even. (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.) oil changes____

brake repair____

The company has a desired net income of $49,995 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)

oil changes____

brake repair____