Hello,

I am stuck on this question around analyzing cost options. Would you work this problem and share about your process? Thank you.

-profit level? E19-15 Cottonwood Company reports the following operating results for the month of August: sales $400,000 (units 5,000); variable costs $210,000; and fixed costs $90,000. Man- agement is considering the following independent courses of action to increase net income. 1. Increase selling price by 10% with no change in total variable costs or units sold. 2. Reduce variable costs to 45% of sales. Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income