Question
Exercise 18-15 Yams Company reports the following operating results for the month of August: sales $390,000 (units 5,000), variable costs $256,000, and fixed costs $91,000.
Exercise 18-15
Yams Company reports the following operating results for the month of August: sales $390,000 (units 5,000), variable costs $256,000, and fixed costs $91,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 14% with no change in total variable costs or units sold. 2. Reduce variable costs to 57% of sales.
Compute the net income to be earned under each alternative. (Round intermediate calculations to 2 decimal places e.g. 2.25 and final answer to 0 decimal places, e.g. 12,125.)
1. Net Income $ 2. Net Income $
Which course of action will produce the higher net income? Alternative 1 Alternative 2
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