Crane Company reports the following operating results for the month of August: sales $$378,000($units $5,000)$; variable costs

$$273,420$; and fixed costs $$88,200.$ Management is considering the following independent courses of action to increase operating

income:

Increase the selling price by $10\%$ with no change in total variable costs.

Reduce variable costs to $65\%$ of sales.

Reduce fixed costs by $$12,600.$

$1.$ Calculate the operating income that would be earned under each alternative.

Operating income

Alternative $1$

Alternative $2$

Alternative $3$

$2.$ Which course of action will produce the highest operating income?