Pharoah Company reports the following operating results for the month of August: sales $400,000 (units 5,000), variable costs $256,000, and fixed costs $91,000. Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 15% with no change in total variable costs or units sold. Reduce variable costs to 57% of sales. 2. Compute the net income to be earned under each alternative. 1. Net Income 2. Net Income $ Which course of action will produce the higher net income?