Englehart, Inc. reports the following operating results for the month of August: Sales $$450,000$

$($units $5,000)$; variable costs $$280,000$; and fixed costs $$115,000.$ Management is considering

the following independent courses of action to increase net income.

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

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

Reduce fixed costs by $$15,000.$

Instructions

$($a$)$ Calculate Net Income for each independent case by applying the above changes. $($Show

your work$)$

$($b$)$ If maximizing net income is the objective, which is the best course of action?

$($a$)$

Increase Selling Price

Revised sales

Variable costs

Contribution margin

Fixed costs

Net income

Reduce Variable Costs

Sales

Revised Variable costs

Contribution margin

Fixed costs

Net income

Reduce Fixed Costs

Sales

Variable costs

Contribution margin

Revised Fixed costs

Net income