Finny Inc's contribution format income statement for the most recent month is given below:Sales (58,000 units)Variable expensesContribution marginFixed expensesNet operating income$1,160,000812,000348,000278,40069,600$The industry in which Finny Inc. operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably fromyear to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways ofimproving profits.Required:1. New equipment has come on the market that would allow Finny Inc. to automate a portion of its operations. Variable expenseswould be reduced by $6 per unit. However, fixed expenses would increase to a total of $626,400 each month. Prepare twocontribution format income statements: one showing present operations, and one showing how operations would appear if the newequipment were purchased.AmountPresentPer UnitPercentage%CAR %%AmountProposedPer UnitPercentage%%%

Variable expenses are expenses that vary with the number of units sold.Fixed expenses are expenses…

Answered: Required: 1. New equipment has come on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Required: 1. New equipment has come on would be reduced by $6 per un contribution format income stat equipment were purchased.