E19-3 Dalton Company reports the following operating results for the month of

E19-3
Dalton Company reports the following operating results for the month of August: Sales $300000 (units 5000); variable costs $210000; and fixed costs
$70000. Management is considering the following independent courses of action to increase net

income.

1. Increase selling price by 10% with no change in total variable costs or sales volume.

2. Reduce variable costs to 58% of sales.

3. Reduce fixed costs by $20000.

Instructions

Compute the net income to be earned under each alternative. Which course of action will produce the highest net income?