Finny Inc's contribution format income statement for the most recent month is given below:

Sales units$)$

Variable expenses

Contribution margin

Fixed expenses

Net operating income

The industry in which Finny Inc. operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from

year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of

improving profits.

Required:

New equipment has come on the market that would allow Finny Inc. to automate a portion of its operations. Variable expenses

would be reduced by $$6$ per unit. However, fixed expenses would increase to a total of $$496,800$ each month. Prepare two

contribution format income statements: one showing present operations, and one showing how operations would appear if the new

equipment were purchased.