BA225 Managerial Accounting: E6-3 Norton Company reports the following operating results

BA225 Managerial Accounting

E6-3
Norton Company reports the following operating results for month of August:
Sales $300,000 (units 5,000); variable cost $210,000; and fixed cost $70,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 10% with no change in total variable costs or sales volume.
2. Reduce variable costs to 58% of sales.
3. Reduced fixed costs by $20,000

Instructions:
Compute the net income to be earned under each alternative. Which course of action will produce the highest next income?
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