Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $218,000; and fixed costs $70,000. 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 57% of sales.

3. Reduce fixed costs by $22,000.

Which course of action will produce the highest net income?