Assume that Company A and Company B sell a microwave popcorn popper for $$25.$ Although the companies have different cost structures, both companies are profitable based on sales of $35,000$ units as shown in the following financial statements for the month of June. Both companies hold no inventory and sell contractual orders in the month.

For the Month of June Company A Company B

Sales $$875,000$ $$875,000$

Variable cost of goods sold $($$$5\mathrm{.}00,7\mathrm{.}50,$ Company A and B$,$ respectively$)$ $$175,000$ $$262,500$

Variable selling and administrative costs $($$$2\mathrm{.}00,$ $$4\mathrm{.}00,$ Company A and B$,$ respectively$)$ $$70,000$ $$140,000$

Contribution margin $$630,000$ $$472,500$

Fixed cost of goods sold $$225,000$ $$150,000$

Fixed selling and administrative costs $$120,000$ $$60,000$

Profits Before$-$Tax $$285,000$ $$262,500$

The company is considering the purchase of a new machine, which will add $$50,000$ in monthly fixed cost, but will allow to lower the sales price to $$23$ per unit and increases sales volume to $40,0000$ units.