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The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Number of customers (a) Sales revenue (a x $220)
The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Number of customers (a) Sales revenue (a x $220) Variable cost (a x $185) Variable cost (a x $0) Contribution margin Fixed cost Net income Benson 83 $ 18,260 N/A Baird 83 $ 18,260 (15,355) 0 N/A 18,260 (15,355) 2,905 0 $ 2,905 $ 2,905 Required a. Reconstruct Benson's income statement, assuming that it serves 166 customers when it lures 83 customers away from Baird by lowering the sales price to $120 per customer. b. Reconstruct Baird's income statement, assuming that it serves 166 customers when it lures 83 customers away from Benson by lowering the sales price to $120 per customer. Required A Required B Reconstruct Benson's income statement, assuming that it serves 166 customers when it lures 83 customers away from Baird by lowering the sales price to $120 per customer. BENSON COMPANY Income Statement Sales revenue Variable cost Contribution margin $ 0 Fixed cost Net income (loss) $ 0 Required A Required B Reconstruct Baird's income statement, assuming that it serves 166 customers when it lures 83 customers away from Benson by lowering the sales price to $120 per customer. BAIRD COMPANY Income Statement Sales revenue Variable cost Contribution margin $ Fixed cost 0 Net income (loss) $ 0
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