Sheridan Company reports the following operating results for the month of February: sales $894,000 (units 14,900); variable costs $429,120; and fixed costs $221,200.

Sheridans management is looking at longer term solutions to improve net income. One of the options it has reviewed will increase fixed expenses by $27,900 while reducing variable expenses by $2.00 per unit. Management feels that with these changes, the price of the product could be reduced by $1.00 per unit. The decrease in price will then result in an increase in unit sales of 5%. Compute the net income to be earned under this alternative. Do you recommend this option? Why or why not? (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.)