Calculate the operating income

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Question - Moran Company reports the following operating results for the month of August: sales $320,000 (units 5,000); variable costs $224,000; and fixed costs $69,500. Management is considering the following independent courses of action to increase operating income:

1. Increase the selling price by 10% with no change in total variable costs.

2. Reduce variable costs to 65% of sales.

3. Reduce fixed costs by $23,800.

Required -

1. Calculate the operating income that would be earned under each alternative.

2. Which course of action will produce the highest operating income?

Reference no: EM132559871

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