Q$\mathrm{.}6)/$F Company is debating whether to purchase new equipment that would increase

fixed costs from $$96,000$ to $$196,000,$ and decrease variable costs from $$14$ per unit to

$$8$ per unit. If it were to implement the change at its current production level of

$100,000,$ profit would not change. Selling price is $$20$ per unit.

$($a$)$ Prepare an income statement showing the changes to fixed and variable costs

$($b$)$ Calculate the degree of operating leverage for each situation and explain the change.

Q$\mathrm{.}6)/$ F Company is debating whether to purchase new equipment that would increase

fixed costs from $$96,000$ to $$196,000,$ and decrease variable costs from $$14$ per unit to

$$8$ per unit. If it were to implement the change at its current production level of

$100,000,$ profit would not change. Selling price is $$20$ per unit.

$($a$)$ Prepare an income statement showing the changes to fixed and variable costs

$($b$)$ Calculate the degree of operating leverage for each situation and explain the change.