The following income statements illustrate different cost structures for two competing companies: Fixed cost Income Statements Net income Company Name Campbell 89 $ 19,580 (15,575) N/A 4,005 0 $ 4,005 Number of customers (a) Sales revenue (a x $220) $ 19,580 Variable cost (a x $175) KES Variable cost (a x $0) Contribution margin. $ 4,005 Fanning 89 N/A 0 19,580 (15,575) Required a. Reconstruct Fanning's income statement, assuming that it serves 178 customers when it lures 89 customers away from Campbell by lowering the sales price to $120 per customer. . Reconstruct Campbell's income statement, assuming that it serves 178 customers when it lures 89 customers away from Fanning by lowering the sales price to $120 per customer.
The following income statements illustrate different cost structures for two competing companies: Fixed cost Income Statements Net income Company Name Campbell 89 $ 19,580 (15,575) N/A 4,005 0 $ 4,005 Number of customers (a) Sales revenue (a x $220) $ 19,580 Variable cost (a x $175) KES Variable cost (a x $0) Contribution margin. $ 4,005 Fanning 89 N/A 0 19,580 (15,575) Required a. Reconstruct Fanning's income statement, assuming that it serves 178 customers when it lures 89 customers away from Campbell by lowering the sales price to $120 per customer. . Reconstruct Campbell's income statement, assuming that it serves 178 customers when it lures 89 customers away from Fanning by lowering the sales price to $120 per customer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following income statements illustrate different cost structures for two competing companies:
Income Statements
Number of customers (a)
Sales revenue (a × $220)
Variable cost (a x $175)
Variable cost (a x $0)
Contribution margin
Fixed cost
Net income
Company Name
Fanning
89
$ 19,580
N/A
0
19,580
(15,575)
4,005
$
Campbell
89
$ 19,580
$
(15,575)
N/A
4,005
0
4,005
Required
a. Reconstruct Fanning's income statement, assuming that it serves 178 customers when it lures 89 customers away from Campbell by
lowering the sales price to $120 per customer.
b. Reconstruct Campbell's income statement, assuming that it serves 178 customers when it lures 89 customers away from Fanning by
lowering the sales price to $120 per customer.
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