Swifty Company reports the following operating results for the month of February: sales $924,000 (units 15,400); variable costs $448,140; and fixed costs $210,600. Management is considering the following independent courses of action to increase net income.

1.		Increase selling price by 2.7% with no change in total variable costs or units sold.
2.		Reduce variable costs to 45.20% of sales.

b) Swiftys management is looking at longer term solutions to improve net income. One of the options it has reviewed will increase fixed expenses by $25,200 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.)

Net Income

$(enter the net income in dollars)

This option is (recommended/not recommended) as it (increases/decreases) Long term.