a. Assume that Standard can lure all 150 customers away from Variant by lowering its sales price to $85 per customer. Reconstruct Standards income statement based on 300 customers.

b. Assume that Variant can lure all 150 customers away from Standard by lowering its sales price to $85 per customer. Reconstruct Variants income statement based on 300 customers.

c. Why does the price-cutting strategy increase Standards profits but result in a net loss for Variant?

Income Statements Company Standard Variant Number of customers (a) Sales revenue (ax $160) Variable cost (a x $90) Contribution margin Fixed costs Net income 150 $24,000 NA 24,000 (13,500) $10.500 150 $24,000 (13,500) 10,500 NA $10.500