Rooney Company currently produces and sells 6,600 units annually of a product that has a variable cost of $8 per unit and annual fixed costs of $281,000. The company currently earns a $82,000 annual profit. Assume that Rooney has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $6 per unit. The investment would cause fixed costs to increase by $9,400 because of additional depreciation cost.

Required

1. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used).

2. Prepare a contribution margin income statement, assuming that Rooney invests in the new production equipment.