Stuart Company currently produces and sells 8,300 units annually of a product that has a variable cost of $9 per unit and annual fixed costs of $382,500. The company currently earns a $74,000 annual profit. Assume that Stuart has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $7 per unit. The investment would cause fixed costs to increase by $9,600 because of additional depreciation cost.

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

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