Norton Company reports the following operating
results for the month of August
E6-3 Norton Company reports the following operating results for the month of August:
|
Sales
|
$310,000
|
|
Variable costs
|
$210,000
|
|
Sales in units
|
5,000
|
Fixed costs
|
$75,000
|
Management is considering the following independent courses of action to increase net income.
Instructions
Each alternative is independent of the other alternatives.
(1) Compute the net income to be earned if management increases the selling price by 10% with no change in total variable costs.
(2) Compute the net income to be earned if management reduces variable costs to of sales.
Which course of action will produce the highest net income?
TUTORIAL PREVIEW
Instructions:
Each alternative is independent of the other alternatives
|
Current selling price
|
=
|
$310,000
|
÷
|
5,000
|
units
|
