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Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will
Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $2 but will increase fixed costs by 10%. MARKHAM FARMS Contribution Margin Income Statement Sales (1,600 Units @ $75 per unit) $120,000 Variable Costs (1,600 Units @ $20 32,000 per Unit) Contribution Margin $88,000 Fixed Cost 40,000 Net Income (Loss) $48,000 Prepare a projected contribution margin income statement for Markham Farm assuming it purchases the new equipment. Assume sales level remains unchanged. MARKHAM FARMS Contribution Margin Income Statement Sales 120,000 Variable Costs 28,800 Contribution Margin Fixed Cost Net Income (Loss) $
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