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Finch Company currently produces and sells 8,100 units annually of a product that has a variable cost of $12 per unit and annual fixed costs
Finch Company currently produces and sells 8,100 units annually of a product that has a variable cost of $12 per unit and annual fixed costs of $371,600. The company currently earns a $82,000 annual profit. Assume that Finch has the opportunity to invest in new labor- saving production equipment that will enable the company to reduce variable costs to $10 per unit. The investment would cause fixed costs to increase by $10,400 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 Finch 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 Required A Required B Prepare a contribution margin income statement, assuming that Finch invests in the new production eq FINCH COMPANY Contribution margin Income statement
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