Markham Farms reports the following contribution margin income statement for the month of August. The firm has
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Question:
Markham Farms reports the following contribution margin income statement for the month of August. The firm has the opportunity to purchase new machinery that will reduce its variable cost per unit by $3 but increase its fixed costs by 20%.
GRANJA'S MARKHAM | |
Contribution margin income statement | |
Sales (1,400 Units @ $75 per unit) | $105,000 |
Variable Costs (1,400 Units @ $10 per Unit) | 14,000 |
Contribution margin | $91,000 |
Fixed cost | 40.000 |
Net income (loss) | $51,000 |
Prepare an income statement of the projected contribution margin for Markham Farm, assuming you purchase the new equipment. Assume that the level of sales remains unchanged.
Related Book For
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
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