Kreter, Inc. earned net income of $300,000 last year. This year it wants to earn net income of $450,000. The company's Englehart, Inc. reports the following operating results for the month of August: Sales $400,000 (units 5,000); variable costs $280,000; and fixed costs $95,000. Management 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. 2. Reduce variable costs to 65% of sales. 3. Reduce fixed costs by $15,000. Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income?