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Birchfield Company reports the following operating results for the month of February: sales $894,000 (units 14,900); variable costs $429,120; and fixed costs $221,200. Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 2.5% with no change in total variable costs or units sold. 2. Reduce variable costs to 44.80% of sales. Compute the net income to be earned under each alternative. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.) Alternative #1 Alternative #2 Net Income $ $ Which course of action will produce the highest net income? will produce the highest net income. e Textbook and Media Birchfield's management is looking at longer term solutions to improve net income. One of the options they have reviewed will increase fixed expenses by $27,900 while reducing variable expenses by $2.00 per unit. Management feels that with these changes the price of the product could be reduced by $1.00 per unit. The decrease in price will then result in an increase in unit sales of 5%. Compute the net income to be earned under this alternative. Do you recommend this option? Why or why not? (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to O decimal places, e.g. 125.) Net Income $ This option is as it net income

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