Question
The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Munoz Jordan Number of customers (a) 88 88 Sales
The following income statements illustrate different cost structures for two competing companies:
Income Statements | |||||||
Company Name | |||||||
Munoz | Jordan | ||||||
Number of customers (a) | 88 | 88 | |||||
Sales revenue (a $200) | $ | 17,600 | $ | 17,600 | |||
Variable cost (a $190) | N/A | (16,720 | ) | ||||
Variable cost (a $0) | 0 | N/A | |||||
Contribution margin | 17,600 | 880 | |||||
Fixed cost | (16,720 | ) | 0 | ||||
Net income | $ | 880 | $ | 880 | |||
Required
-
Reconstruct Munozs income statement, assuming that it serves 176 customers when it lures 88 customers away from Jordan by lowering the sales price to $100 per customer.
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Reconstruct Jordans income statement, assuming that it serves 176 customers when it lures 88 customers away from Munoz by lowering the sales price to $100 per customer.
Munoz
sales revenue:
Variable cost:
Contribution Margin:
Fixed Cost
Net income (loss)
Jordan
Sales revenue :
Variable cost:
Contribution margin:
Fixed cost
Net income:
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