Exercise 18-15 Yams Company reports the following operating results for the mont

Question

Exercise 18-15 Yams Company reports the following operating results for the month of August: sales $382,500 (units 5,100), variable costs $253,000, and fixed costs $97,000. Management is considering the following independent courses of action to increase net income. I. Increase selling price by 15% with no change in total variable costs or units sold. 2, Reduce variable costs to 58% of sales. 4 Compute the net income to be earned under each alternative. (Round intermediate calculations to 2 decimal places e.g. 2.25 and final answer to 0 decimal places, e.g. 12,125.) 1. Net Income 2. Net Income $ Which course of action will produce the higher net income? Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT VIDEO: APPLIED SKILLS

Explanation / Answer

1 Net income=(382500*1.15)-253000-97000= $89875 2 Net income=382500-(382500*58%)-97000= $63650 Alternative 1 will produce higher net income

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