Question
Astro Co. sold 19,600 units of its only product and incurred a $46,568 loss (ignoring taxes) for the current year as shown here. During a
Astro Co. sold 19,600 units of its only product and incurred a $46,568 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018s 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 $146,000. The maximum output capacity of the company is 40,000 units per year.
ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2017 | |||||
Sales | $ | 727,160 | |||
Variable costs | 581,728 | ||||
Contribution margin | 145,432 | ||||
Fixed costs | 192,000 | ||||
Net loss | $ | (46,568 | ) | ||
Astro Co. sold 19,600 units of its only product and incurred a $46,568 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018s 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 $146,000. The maximum output capacity of the company is 40,000 units per year.
ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2017 | |||||
Sales | $ | 727,160 | |||
Variable costs | 581,728 | ||||
Contribution margin | 145,432 | ||||
Fixed costs | 192,000 | ||||
Net loss | $ | (46,568 | ) | ||
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