Finch Company currently produces and sells 7,500 units annually of a product that has a variable cost of $13 per unit and annual fixed costs of $251,500. The company currently earns a $71,000 annual profit. Assume that Finch has the opportunity to invest in new laborsaving production equipment that will enable the company to reduce variable costs to $11 per unit. The investment would cause fixed costs to increase by $10,400 because of additional depreciation cost.

Required

A. Complete this question by entering your answers in the tabs below. 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 Finch invests in the new production equipment.