Question
Keleher Industries manufactures pet doors and sells them directly to the consumer via their website. The marketing manager believes that if the company invests in
Keleher Industries manufactures pet doors and sells them directly to the consumer via their website. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Sales( 3,100 units at $250) $775,000
Variable Costs (3,100 units at $115) $356,500
Contribution Margin $418,500
Fixed costs $19,500
Net Income (loss) $399,000
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