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Faxmatic, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a
Faxmatic, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: |
Sales (22,000 units at $105 per unit) | $ | 2,310,000 |
Variable expenses | 1,386,000 | |
Contribution margin | 924,000 | |
Fixed expenses | 945,000 | |
Net operating loss | $ | (21,000) |
Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $115,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? |
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