Moran Company reports the following operating results for the month of August: sales $320,000 (units 5,000); variable costs $224,000; and fixed costs $69,500. Management is considering the following independent courses of action to increase operating income:

1.Increase the selling price by 10% with no change in total variable costs.

2.Reduce variable costs to 65% of sales.

3.Reduce fixed costs by $23,800.

Calculate the operating income that would be earned under each alternative.

Operating income

Alternative 1$

Alternative 2$

Alternative 3$

Which course of action will produce the highest operating income?

will produce the highest operating income