Question 1: Berry Company reports the following operating results for the month of August: sales $335,000 (units 5,000): variable costs $225,000; and fixed costs $72,000. 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 55% of sales.

3. Reduce fixed costs by $15,000.

Required: Calculate the operating income to be earned under each alternative. Which course of action will produce the highest operating income?