Henderson Farms reports the following results for the month of November:

Sales (10,000 units)		$600,000
Variable costs		420,000
Contribution margin		180,000
Fixed costs		110,000
Net income		$ 70,000

Management is considering the following independent courses of action to increase net income.

1.	Increase selling price by 5% with no change in total variable costs.
2.	Reduce variable costs to 66 /% of sales.
3.	Reduce fixed costs by $10,000.

Calculate net income for the above courses of action.

Course			Net Income
1.	Increase selling price		$
2.	Reduce variable cost		$
3.	Reduce fixed cost		$

If maximizing net income is the objective, which is the best course of action?

Best course of action is reducing variable costincreasing selling pricereducing fixed cost

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