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Question - Berry Company reports the following operating results for the month of August: sales $345,000 (units 5,000): variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase operating income:
1. Increase the selling price by 7% with no change in total variable costs.
2. Reduce variable costs to 50% of sales.
3. Reduce fixed costs by $15,000.
Required - Calculate the operating income to be earned under each alternative. Which course of action will produce the highest operating income?
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