Spark Company has the following data for the month of April:

Sales $(10,000$ units$)$ $$600,000$

Variable costs $420,000$

Contribution Margin $180,000$

Fixed costs $110,000$

Net income $70,000$

Management is considering the following independent courses of action to increase net income.

$1.$ Increase selling price by $6\%$ with no change in total variable costs.

$2.$ Reduce variable costs to $65\%$ of sales.

$3.$ Reduce fixed costs by $$20,000.$

Instructions

Which is the best course of action if the company wants to earn as much net income as possible? Be sure to show all calculations for each alternative to prove your choice!