Drake Company produces a single product. Last year's income statement is as follows: Sales (23,000 units) $1,384,600 Less: Variable costs 938,400 Contribution margin $ 446,200 Less: Fixed costs 258,500 Operating income $ 187,700 3. Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $227,800 per year, but will lower variable costs to 48 percent of sales. Units sold will remain unchanged. a) Prepare a budgeted income statement assuming Drake makes this investment. (Round all amounts to the nearest dollar.) b) What is the new breakeven point in units, assuming the investment is made? (In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.)
Drake Company produces a single product. Last year's income statement is as follows:
Sales (23,000 units) $1,384,600
Less: Variable costs 938,400
Contribution margin $ 446,200
Less: Fixed costs 258,500
Operating income $ 187,700
3. Suppose that Drake Company is considering an investment in new technology that will
increase fixed costs by $227,800 per year, but will lower variable costs to 48 percent of sales.
Units sold will remain unchanged. a) Prepare a
makes this investment. (Round all amounts to the nearest dollar.) b) What is the new breakeven point in units, assuming the investment is made? (In your computations, round the unit
contribution margin to the nearest cent. Round your final answer to the nearest whole unit.)
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