Astro Co. sold 19,200 units of its one product and incurred a loss of $43,072 (ignoring tax) for the current year, as shown here. During an activity planning session for the year 2016, the production manager observes that variable costs can be reduced by 50% by installing a machine that automates several operations. To realize these savings, the company must increase its annual fixed costs by $142,000. The maximum production capacity of the company is 40,000 units per year.

ASTRO COMPANY Contribution margin income statement For the year ended December 31, 2015
Sales		ps	704,640
Variable costs			563,712
Contribution margin			140,928
Fixed costs			184.000
Net loss		ps	(43,072	)

 Required

1. Calculate the breakeven point in sales in dollars for the year 2015.

2. Calculate the forecast break-even point in sales in dollars for the year 2016, assuming the machine is installed and there are no changes in the unit selling price

3. Prepare a 2016 expected contribution margin income statement that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change and that no income taxes will be paid

4. Calculate the required level of sales in both dollars and units to earn a target $120,000 pre-tax income in 2016 with the machine installed and no change in unit sales price.

5. Prepare a forecast contribution margin income statement showing the results at the sales level calculated in part 4. Assume no income taxes will be due.