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Fanning Company currently produces and sells 7,300 units annually of a product that has a variable cost of $11 per unit and annual fixed costs
Fanning Company currently produces and sells 7,300 units annually of a product that has a variable cost of $11 per unit and annual fixed costs of $286,700. The company currently earns a $71,000 annual profit. Assume that Fanning has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $9 per unit. The investment would cause fixed costs to increase by $10,200 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 Fanning 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
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