The following income statements illustrate different cost structures for two competing companies:

The following income statements illustrate different cost structures for two competing companies:

Income Statements
	Company Name
	Munoz				Jordan
Number of customers (a)		85				85
Sales revenue (a × $210)	$	17,850			$	17,850
Variable cost (a × $185)		N/A				(15,725	)
Variable cost (a × $0)		0				N/A
Contribution margin		17,850				2,125
Fixed cost		(15,725	)			0
Net income	$	2,125			$	2,125

Required

1. Reconstruct Munoz’s income statement, assuming that it serves 170 customers when it lures 85 customers away from Jordan by lowering the sales price to $110 per customer.
   
2. Reconstruct Jordan’s income statement, assuming that it serves 170 customers when it lures 85 customers away from Munoz by lowering the sales price to $110 per customer.
   
   
   
   a. & b.

   Income Statements
   	a.				b.
   Company Name	Munoz				Jordan
   Number of Customers (n)		170				170
   Sales revenue (n × $110)	$	18,700			$	18,700
   Variable cost (n × $185)						(31,450	)
   Variable cost (n × $0)		0
   Contribution margin		18,700				(12,750	)
   Fixed cost		(15,725	)			0
   Net income (loss)	$	2,975			$	(12,750	)

   
   

Thanks