Exercise $2-12$A $($Algo$)$ Using fixed cost as a competitive business strategy LO $2-1,2-2$

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

Income Statements

Company Name

Baird Adams

Number of customers $($a$)8686$

Sales revenue $($a $\backslash$times $$240)$ $$20,640$ $$20,640$

Variable cost $($a $\backslash$times $$175)$ N$/$A $(15,050)$

Contribution margin $20,6405,590$

Fixed cost $(15,050)0$

Net income $$5,590$ $$5,590$

Required

Reconstruct Baird$$s income statement, assuming that it serves $172$ customers when it lures $86$ customers away from Adams by lowering the sales price to $$140$ per customer.

Reconstruct Adams$$s income statement, assuming that it serves $172$ customers when it lures $86$ customers away from Baird by lowering the sales price to $$140$ per customer.