Required information [The following information applies to the questions displayed below.]

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

Model no. 6754:

Variable costs, $19.00 per unit

Annual fixed costs, $986,100

Model no. 4399:

Variable costs, $10.80 per unit

Annual fixed costs, $1,114,200

Corrigans selling price is $66 per unit for the universal gismo, which is subject to a 5 percent sales commission. (In the following requirements, ignore income taxes.)

2-a. Calculate the net income of the two systems if sales and production are expected to average 43,000 units per year.

2-b. Which of the two systems would be more profitable? Model No. 6754 Model No. 4399