Question: Exercise 2-12A 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:

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Exercise 2-12A 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 Kent Trent Number of customers (a) 88 88 Sales revenue (a x $250 22,000 22,000 Variable cost (a x $180) N/A (15,840) Variable cost (a x $0) N/A Contribution margin 22,000 6,160 (15,840) Fixed cost 6,160 6,160 Net income Required a. Reconstruct Kent's income statement, assuming that it serves 176 customers when it lures 88 customers away from Trent by lowering the sales price to $150 per customer. KENT'S Income Statement Sales revenue Variable cost Contribution margin Fixed cost 0 Net income

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