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Unruh Company reports the following results for the month of November: $600,000 Sales (10,000 units) Variable costs Contribut

2. Reduce variable costs to 65% of sales. 3. Reduce fixed costs by $20,000. Instructions If maximizing net income is the obje

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Answer #1
Income Statement
Alternative 1 Amount
Sales 636000 (10000*60*1.06)
Variable Costs 420000
Contribution Margin 216000
Fixed Cost 110000
Net Income 106000
Alternative 2 Amount
Sales 600000
Variable Costs 390000 (600000*65%)
Contribution Margin 210000
Fixed Cost 110000
Net Income 100000
Alternative 3 Amount
Sales 600000
Variable Costs 420000
Contribution Margin 180000
Fixed Cost 90000 (110000-20000)
Net Income 90000

Alternative 1 is best as net income is highest in that strategy.

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