Flint Company reports the following operating results for the month of August: s

Question

Flint Company reports the following operating results for the month of August: sales $350,000 (units 5,000), variable costs $248,000, and fixed costs $97,000. Management is considering the following independent courses of action to increase net income.

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.)

Which course of action will produce the higher net income?

1. Increase selling price by 11% with no change in total variable costs or units sold. 2. Reduce variable costs to 57% of sales.

Explanation / Answer

The correct answer is :

Alternative 2 would produce the higher net income.

Notes:

1. Alternative 1 , Sales = $ 350,000 * 111%

= $ 388,500

2. Alternative 2 , Variable Cost = $ 350,000 * 57%

= $ 199,500

3.

1 Net Income $ 43,500 2 Net Income $ 53,500

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.