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Exercise 2-12A (Algo) Using fixed cost as a competitive business strategy LO 2-1, 2-2 The following income statements illustrate different cost structures for two competing
Exercise 2-12A (Algo) Using fixed cost as a competitive business strategy LO 2-1, 2-2 The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Fanning Campbell Number of customers (a) 88 88 Sales revenue (a X $240) $ 21,120 $ 21,120 Variable cost (a x $185) N/A (16,280) Variable cost (a x $0) N/A Contribution margin 21,120 4,840 Fixed cost (16,280) Net income $ 4,840 $ 4,840 0 Required a. Reconstruct Fanning's income statement, assuming that it serves 176 customers when it lures 88 customers away from Campbell by lowering the sales price to $140 per customer. b. Reconstruct Campbell's income statement, assuming that it serves 176 customers when it lures 88 customers away from Fanning by lowering the sales price to $140 per customer. Complete this question by entering your answers in the tabs below. Required A Required B Complete this question by entering your answers in the tabs below. Required A Required B Reconstruct Fanning's income statement, assuming that it serves 176 customers when it lures 88 customers away from Campbell by lowering the sales price to $140 per customer. FANNING COMPANY Income Statement Sales revenue Variable cost Contribution margin Fixed cost Net income (loss) Complete this question by entering your answers in the tabs below. Required A Required B Reconstruct Campbell's income statement, assuming that it serves 176 customers when it lures 88 customers away from Fanning by lowering the sales price to $140 per customer. CAMPBELL COMPANY Income Statement Sales revenue Variable cost Contribution margin Fixed cost Net income (loss)
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