Walton Company currently produces and sells $6,700$ units annually of a product that has a variable cost of $$16$ per unit and annual

fixed costs of $$239,600.$ The company currently earns a $$82,000$ annual profit. Assume that Walton has the opportunity to invest in

new labor$-$saving production equipment that will enable the company to reduce variable costs to $$14$ per unit. The investment would

cause fixed costs to increase by $$9,400$ because of additional depreciation cost.

Required

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

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

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