Markham Farms reports the following contribution margin income statement for the month of August. The firm has the opportunity to purchase new machinery that will reduce its variable cost per unit by $3 but increase its fixed costs by 20%.

GRANJA'S MARKHAM
Contribution margin income statement
Sales (1,400 Units @ $75 per unit)	$105,000
Variable Costs (1,400 Units @ $10 per Unit)	14,000
Contribution margin	$91,000
Fixed cost	40.000
Net income (loss)	$51,000

Prepare an income statement of the projected contribution margin for Markham Farm, assuming you purchase the new equipment. Assume that the level of sales remains unchanged.

Answer rating: 100% (QA)

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