Barnes Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $222,000; and fixed costs $71,900. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative.1. Increase selling price by 10% with no change in total variable costs or sales volume. What's the Net income?2. Reduce variable costs to 60% of sales. Whats the Net income?3. Reduce fixed costs by $19,000. Whats's the Net income?Which course of action will produce the highest net income?

1. Increase selling price by 10% with no change in total variable costs or sales volume. What's the Net income?

Increase selling price by 10%,

300,000 x 110% = $330,000

Sales                                   $330,000

Variable Cost                      $222,000

Contribution margin            $108,000  

Fixed Costs                          $71,900

Net Income                           $36,100

Net Income is $36,100 if sales price is increased by 10%, with no change in variable or fixed costs.

2. Reduce variable costs to 60% of sales. Whats the Net income?

Take 60% of sales to get the total variable cost:

$300,000 x 60% = 180,000

Sales                                   $300,000

Variable Cost                      $180,000

Contribution margin            $120,000  

Fixed Costs                          $71,900

Net Income                           $48,100

Net Income is $48,100 if variable costs reduce to 60% of sales.

3. Reduce fixed costs by $19,000. Whats's the Net income?Which course of action will produce the highest net income?

Reduce fixed costs by $19,000

$71,900 - $19,000 = $52,900

Sales                                   $300,000

Variable Cost                      $222,000

Contribution margin            $78,000  

Fixed Costs                          $52,900

Net Income                           $25,100.

The highest income is produced in scenario 2, when the variable costs are reduced to 60% of sales.

these are the four factors that influence enterpreneurship development

1. economic development

2. culture

3.technological development

4. education

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