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Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Gibson Company currently produces and sells 7,000 units annually of a product that
Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Gibson Company currently produces and sells 7,000 units annually of a product that has a variable cost of $6 per unit and annual xed costs of $287,000. The company currently earns a $77,000 annual prot. Assume that Gibson 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 ca use fixed costs to increase by $10,200 because of additional depreciation cost. Required 3. 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 Gibson invests in the new production equipment. Complete this question by enterlng 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). - Complete this question by entering your answers In the tabs below. Required A Required B Prepare a contribution margin income statement, assuming that Gibson invests in the new production equipment. ( Required A
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