Finny Inc's contribution format income statement for the most recent month is given below: Sales (56,000...

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Finny Inc's contribution format income statement for the most recent month is given below: Sales (56,000 units) Variable expenses Contribution margin 4 Fixed expenses Net operating income $1,120,000 840,000 280,000 224,000 $ 56,000 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: 1. 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 $5 per unit. However, fixed expenses would increase to a total of $504,000 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. Sales Variable expenses Contribution margin Fixed expenses Amount Present Per Unit Percentage Amount Proposed Per Unit Percentage $ 1,120,000 % % 840,000 280,000 $ 224,000 % % 0 0% 0 $ 0 0% Finny Inc's contribution format income statement for the most recent month is given below: Sales (56,000 units) Variable expenses Contribution margin 4 Fixed expenses Net operating income $1,120,000 840,000 280,000 224,000 $ 56,000 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: 1. 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 $5 per unit. However, fixed expenses would increase to a total of $504,000 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. Sales Variable expenses Contribution margin Fixed expenses Amount Present Per Unit Percentage Amount Proposed Per Unit Percentage $ 1,120,000 % % 840,000 280,000 $ 224,000 % % 0 0% 0 $ 0 0%

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Answer To prepare the contribution format income statements for present operations and proposed ... View the full answer