1 Compute the break-even point in unit sales for 2019. Per Unit: Fixed Costs Selling Price Contribution Margin per Unit Variable Costs Contribution Margin Compute the predicted break-even point in unit sales for 2020 assuming the machine is installed and there is no change in the unit selling price or units sold from 2019. HINT: 2 Remember to adjust variable costs and fixed costs for the installation of the machine. Per Unit: Selling Price Variable Costs Contribution Margin Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the maching installed. Assume that the unit selling price and the 3 number of units sold will not change, and no income taxes will be due. Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable Costs Contribution Margin Fixed Costs Net Loss 4 Compute the sales level required in both dollars and units to earn $200,000 of target pretax income in 2020 with the machine installed and no change in unit sales price. CVP Budgeting Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month. As a check figure, the ending cash balance expected on July 31 is $122,400. Use the cash budget template below to complete the exercise. a. Beginning cash balance on July 1: $50,000 Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are May (actual), b. $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. c. Purchases amounts are: June (actual), $700,000; and July (budgeted), $750,000. d. Budgeted cash payments for salaries in July: $275,000 e. Budgeted depreciation expense for July: $36,000 f. Other cash expenses budgeted for July: $200,000 g. Accrued income taxes due in July: $80,000 Bank loan interest paid in July: $6,600 Beginning Balance: Cash Receipts: May Sales June Sales July Sales Cash Payments: June Merchandise Purchases. July Merchandise Purchases: Salaries Other Expenses Astro Co. sold 20,000 units of its only product and incurred a \$50,000 loss (ignoring taxes) for the current year, as shown below. During a planning session for 2020 's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $200,000. The maximum output capacity of the company is 40,000 units per year. REQUIRED: Compute the predicted break-even point in unit sales for 2020 assuming the machine is installed and there is no change in the unit selling price or units sold from 2019 . HINT: 2 Remember to adjust variable costs and fixed costs for the installation of the machine. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the maching installed. Assume that the unit selling price and the 3 number of units sold will not change, and no income taxes will be due. Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month. As a check figure, the ending cash balance expected on July 31 is $122,400. Use the cash budget template below to complete the exercise. a. Beginning cash balance on July 1: $50,000 Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are May (actual). b. $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. c. Purchases amounts are: June (actual), $700,000; and July (budgeted), $750,000. d. Budgeted cash payments for salaries in July: $275,000 e. Budgeted depreciation expense for July: $36,000 f. Other cash expenses budgeted for July: $200,000 g. Accrued income taxes due in July: $80,000 h. Bank loan interest paid in July: $6,600 Beginning Balance: Cash Receipts: May Sales June Sales July Sales Cash Payments: June Merchandise Purchases July Merchandise Purchases Salaries