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I need to understand how to get the sales price too:) Fanning Company currently produces and sells 8,000 units annually of a product that has
I need to understand how to get the sales price too:)
Fanning Company currently produces and sells 8,000 units annually of a product that has a variable cost of $13 per unit and annual fixed costs of $298,000. The company currently earns a $78,000 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 $11 per unit. The investment would cause fixed costs to increase by $10,500 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 Prepare a contribution margin income statement, assuming that Fanning invests in the new production equipment. FANNING COMPANY Contribution margin Income statementStep by Step Solution
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