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Pharoah Company reports the following operating results for the month of August: sales $$360,000(4,800$ units$),$ variable costs $$245,000,$ and fixed costs $$92,000.$ Management is considering the following independent courses of action to increase net income.

Increase the unit selling price by $12\%$ with no change in total variable costs, fixed costs, or units sold.

Reduce variable costs to $61\%$ of sales while holding fixed costs, quantity, and unit selling price constant.

Compute the net income to be earned under each alternative.

Net income $

Net income $

Which course of action will produce the higher net income?

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