The following income statements illustrate different cost structures for two competing companies:

Required
a. Reconstruct Kent€™s income statement, assuming that it serves 200 customers when it lures 100 customers away from Trent by lowering the sales price to $150 per customer.
b. Reconstruct Trent€™s income statement, assuming that it serves 200 customers when it lures 80 customers away from Kent by lowering the sales price to $150 per customer.
c. Explain why the price-cutting strategy increased Kent Company€™s profits but caused a net loss for TrentCompany.

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Income Statements Company Name Kent Trent Number of customers (a) Sales revenue (a × $250) Variable cost (a X $175) Variable cost (a X $O) Contribution margin Axed cost Net income 100 $25,000 (17,500) N/A 7,500 17,500 0 7,500 100 $25,000 N/A 25,000 S 7,500