Question
Zachary Company currently produces and sells 6,500 units annually of a product that has a variable cost of $8 per unit and annual fixed
Zachary Company currently produces and sells 6,500 units annually of a product that has a variable cost of $8 per unit and annual fixed costs of $313,500. The company currently earns a $83,000 annual profit. Assume that Zachary 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 $10,700 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 Zachary invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). Sales price per unit
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