Wellington, Inc., reports the following contribution margin income statement for the month of May. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $10 but will increase fixed costs by 20%. Prepare a projected contribution margin income statement for Wellington, Inc., assuming it purchases the new equipment. Assume sales level remains unchanged.

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WELLINGTON, INC. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (800 units at $225 per unit) Variable costs (800 units at $120 per unit) Contribution margin Fixed cost Net income (loss) $180,000 96,000 84,000 35,000 $ 49,000