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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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