following income statements illustrate different cost stru Income Statements umber of customers (a) les revenue (a $200) ariable cost (a* $140) contribution margin ixed cost et income Company Name Hill Creek 200 $40,000 (28,000) 12,000 0 200 $40,000 N/A 40,000 (28,000) $12,000 $12,000 two compe quired Reconstruct Hill's income statement, assuming that it serves 400 customers when it lur owering the sales price to $120 per customer. Reconstruct Creek's income statement, assuming that it serves 400 customers when it lowering the sales price to $120 per customer.
following income statements illustrate different cost stru Income Statements umber of customers (a) les revenue (a $200) ariable cost (a* $140) contribution margin ixed cost et income Company Name Hill Creek 200 $40,000 (28,000) 12,000 0 200 $40,000 N/A 40,000 (28,000) $12,000 $12,000 two compe quired Reconstruct Hill's income statement, assuming that it serves 400 customers when it lur owering the sales price to $120 per customer. Reconstruct Creek's income statement, assuming that it serves 400 customers when it lowering the sales price to $120 per customer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:The following income statements illustrate different cost structures for two competing companies:
Income Statements
Number of customers (a)
Sales revenue (a $200)
Variable cost (ax $140)
Contribution margin
Fixed cost
Net income
Company Name
Hill
200
$40,000
N/A
40,000
(28,000)
$12,000
Creek
200
$40,000
(28,000)
12,000
0
$12,000
Required
a. Reconstruct Hill's income statement, assuming that it serves 400 customers when it lures 200 customers away from Creek by
lowering the sales price to $120 per customer.
b. Reconstruct Creek's income statement, assuming that it serves 400 customers when it lures 200 customers away from Hill by
lowering the sales price to $120 per customer.
Complete this question by entering your answers in the tabs below.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education