Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. 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.

Net income

$

2. Reduce variable costs to 58% of sales.

Net income

$

3. Reduce fixed costs by $15,000.

Net income

$

Which course of action will produce the highest net income?

Alternative 2Alternative 1Alternative 3