13 ces Required information [The following information applies to the questions displayed below.) Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costa Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Sales Variable costs Contribution Margin Ratio Numerator: Contribution margin per unit $ Break-Even Point in Dollar Sales with New Machine: Numerator: 1 26/ $1,000,000 800,000 200,000 175,000 $ 25,000 / $ Proposed Denominator: Selling price per unit $ Denominator: 0 50 = Contribution Margin Ratio Contribution margin ratio 52% Break-Even Point in Dollars Break-even point in dollars 0 Required information [The following information applies to the questions displayed below.] Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 2. Prepare a contribution margin income statement for next year that shows the expected results with the mach installed. Assum sales are $1,000,000. Contribution margin $ 1,000,000 $ 800,000 200,000 175,000 $ 25,000 0 0