E6.3 (LO 1), AP Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income. Increase selling price by 10% with no change in total variable costs or sales volume. Reduce variable costs to 58% of sales. Reduce fixed costs by $15,000. Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income? Compute break-even point and prepare CVP income statement.
E6.3 (LO 1), AP Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income. Increase selling price by 10% with no change in total variable costs or sales volume. Reduce variable costs to 58% of sales. Reduce fixed costs by $15,000. Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income? Compute break-even point and prepare CVP income statement.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...
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E6.3 (LO 1), AP Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income.
Increase selling price by 10% with no change in total variable costs or sales volume.
Reduce variable costs to 58% of sales.
Reduce fixed costs by $15,000.
Instructions
Compute the net income to be earned under each alternative. Which course of action will produce the highest net income?
Compute break-even point and prepare CVP income statement.
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