Barnes Company reports the following operating results for the month of August: sales $325,000(units 5,000); variable costs $212,000; and fixed costs $70,400. 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.

Net Income $ _________

2.Reduce variable costs to60% of sales.

Net income $____________

3.Reduce fixed costs by $18,000.

Net income_____________

Which course of action will produce the highest net income? Alternative 1, 2 or 3? _______