E6-3 Norton Company reports the following operating results for the month of August:

Norton Company reports the following operating results for the month of August:

Sales $310,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. 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 cost s or sales volume

2.  Reduce variable costs  to 58% of sales

3.  Reduce fixed costs by $20,000

Instructions:

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