Question
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 $3 but will increase fixed costs by 20%.
| MARKHAM FARMS | |
| Contribution Margin Income Statement | |
| Sales (1,400 Units @ $75 per unit) | $105,000 |
| Variable Costs (1,400 Units @ $10 per Unit) | 14,000 |
| Contribution Margin | $91,000 |
| Fixed Cost | 40,000 |
| Net Income (Loss) | $51,000 |
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 | $ |
| Variable Costs | |
| Contribution Margin | $ |
| Fixed Cost | |
| Net Income (Loss) | $ |
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Intermediate Microeconomics And Its Application
Authors: Walter Nicholson, Christopher M. Snyder
13th Edition
0357133064, 978-0357133064
