1. Astro Co. sold 19,000 units of its only product and incurred a $128,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016s activities, the production manager notes that variable costs can be reduced 30% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $140,000. The maximum output capacity of the company is 40,000 units per year.

ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015
Sales		$	760,000
Variable costs			608,000
Contribution margin			152,000
Fixed costs			280,000
Net loss		$	(128,000	)

A) Compute the break-even point in dollar sales for year 2015. (Round your answers to 2 decimal places.)

	Contribution Margin Per Unit		Current
			$0.00
Contribution Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
					0
Break-Even Point in Dollar Sales:
	Choose Numerator:	/	Choose Denominator:	=	Break-Even Point in Dollars
		/		=	Break-even point in dollars
					0

B) Compute the predicted break-even point in dollar sales for year 2016 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.)

	Contribution margin per unit		Proposed
			$0.00
Contribution Margin Ratio
	Choose Numerator:	0	Choose Denominator:	=	Contribution Margin Ratio
		0		=	Contribution margin ratio
					0
Break-even point in dollar sales with new machine:
	Choose Numerator:	0	Choose Denominator:	=	Break-Even Point in Dollars
		0		=	Break-even point in dollars
					0

C) Prepare a forecasted contribution margin income statement for 2016 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

ASTRO COMPANY
Forecasted Contribution Margin Income Statement
For Year Ended December 31, 2016
Contribution margin	0
	$0

D)

Compute the sales level required in both dollars and units to earn $100,000 of target pretax income in 2016 with the machine installed and no change in unit sales price. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage)

	Choose Numerator:	/	Choose Denominator:	=	Sales dollars required
		/		=	Sales dollars required
					0
Sales level required in units
	Choose Numerator:	/	Choose Denominator:	=	Sales units required
		/		=	Sales units required
					0

E) Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due. (Do not round intermediate calculations. Round "per unit answers" to 2 decimal places and other answers to nearest whole dollar.)

ASTRO COMPANY
Forecasted Contribution Margin Income Statement
For Year Ended December 31, 2016
	$ Per Unit	$
	$40.00
Contribution margin		0
		0