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Calculate the operating income to be earned

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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?

Reference no: EM133062414

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