The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Gibson Franklin Number of customers (a) 81 81 Sales revenue (a × $210) $17,010 $17,010 Variable cost (a × $190) N/A (15,390) Contribution margin 17,010 1,620 Fixed cost (15,390) 0 Net income $1,620 $1,620 Required Reconstruct Gibson’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Franklin by lowering the sales price to $110 per customer. Reconstruct Franklin’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Gibson by lowering the sales price to $110 per customer.

The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Gibson Franklin Number of customers (a) 81 81 Sales revenue (a × $210) $17,010 $17,010 Variable cost (a × $190) N/A (15,390) Contribution margin 17,010 1,620 Fixed cost (15,390) 0 Net income $1,620 $1,620 Required Reconstruct Gibson’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Franklin by lowering the sales price to $110 per customer. Reconstruct Franklin’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Gibson by lowering the sales price to $110 per customer.