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Ivanhoe, Inc. reports the following operating results for August: sales $456,000 (units 5,700); variable costs $273,600; and fixed costs $102,600. Management is considering the following
Ivanhoe, Inc. reports the following operating results for August: sales $456,000 (units 5,700); variable costs $273,600; and fixed costs $102,600. Management is considering the following independent courses of action to increase net income.
1. Increase the selling price by 10%
2. Reduce variable cost to 55% of sales.
3. reduce fixed costs by $22,000
Compute the net income to be earned under each alternative.
Net Income | |
1. Increase selling price | $ |
2. Reduce variable cost | $ |
3. Reduce fixed cost | $ |
Which course of action will produce the highest net income?
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