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Campbell Company currently produces and sells 7,600 units annually of a product that has a...

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Accounting

Campbell Company currently produces and sells 7,600 units annually of a product that has a variable cost of $8 per unit and annual fixed costs of $402,400. The company currently earns a $84,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $6 per unit. The investment would cause fixed costs to increase by $9,600 because of additional depreciation cost.
Required
Use the equation method to determine the sales price per unit under existing conditions (current equipment is used).
Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment.

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