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Cobb Company currently produces and sells 9,000 units annually of a product that has a variable cost of $20 per unit and annual fixed costs
Cobb Company currently produces and sells 9,000 units annually of a product that has a variable cost of $20 per unit and annual fixed costs of $195,000. The company currently earns a $228,000 annual profit . Assume that Cobb has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $16 per unit. The investment would cause fixed costs to increase by $25,000 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used) b. Prepare a contribution margin income statement, assuming that Cobb invests in the new production equipment Complete this question by entering your answers in the tabs below. Required A Required B Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). Sales price per unit Required B > Prey 9 of 12 Next > Complete this question by entering your answers in the tabs below. Required A Required B Prepare a contribution margin income statement, assuming that Cobb Invests in the new production equipment. COBB COMPANY Contribution margin Income Statement Sales 603 Variable costs Contribution margin Fixed cost Net income
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