Campbell Company currently produces and sells 7,600 units annually of a product that has a variable cost of $6 per unit and annual fixed costs of $371,800. The company currently earns a $69,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $4 per unit. The investment would cause fixed costs to increase by $10,300 because of additional depreciation cost.

Required:

Use the equation method to determine the sales price per unit under existing conditions (current equipment is used).

Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment.