Astro Co. sold 20,100 units of its only product and incurred a $63,560 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 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $151,000. 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		$	755,760
Variable costs			566,820
Contribution margin			188,940
Fixed costs			252,500
Net loss		$	(63,560	)

rev: 04_29_2016_QC_CS-50299

References

Section BreakProblem 21-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1

4.

value: 10.00 points

Required information

Problem 21-4A Part 1

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

rev: 11_23_2015_QC_CS-33693

References

eBook & Resources

Expanded tableDifficulty: 3 HardLearning Objective: 21-C2 Describe several applications of cost-volume-profit analysis.

Problem 21-4A Part 1Learning Objective: 21-A1 Compute the contribution margin and describe what it reveals about a companys cost structure.Learning Objective: 21-P2 Compute the break-even point for a single product company.

Check my work

5.

value: 10.00 points

Required information

Problem 21-4A Part 2

2.	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.)

rev: 11_03_2015_QC_CS-32169, 04_07_2016_QC_CS-48015, 04_19_2016_QC_CS-49464

References

eBook & Resources

Expanded tableDifficulty: 3 HardLearning Objective: 21-C2 Describe several applications of cost-volume-profit analysis.

Problem 21-4A Part 2Learning Objective: 21-A1 Compute the contribution margin and describe what it reveals about a companys cost structure.Learning Objective: 21-P2 Compute the break-even point for a single product company.

Check my work

6.

value: 10.00 points

Required information

Problem 21-4A Part 3

3.	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.)

References

eBook & Resources

Expanded tableDifficulty: 3 HardLearning Objective: 21-C2 Describe several applications of cost-volume-profit analysis.

Problem 21-4A Part 3Learning Objective: 21-A1 Compute the contribution margin and describe what it reveals about a companys cost structure.Learning Objective: 21-P2 Compute the break-even point for a single product company.

Check my work

7.

value: 10.00 points

Required information

Problem 21-4A Part 4

4.	Compute the sales level required in both dollars and units to earn $210,000 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)

rev: 07_24_2013_QC_32982, 08_05_2013_QC_32982, 12_10_2013_QC_42101, 05_02_2016_QC_CS-50299

References

eBook & Resources

Expanded tableDifficulty: 3 HardLearning Objective: 21-C2 Describe several applications of cost-volume-profit analysis.

Problem 21-4A Part 4Learning Objective: 21-A1 Compute the contribution margin and describe what it reveals about a companys cost structure.Learning Objective: 21-P2 Compute the break-even point for a single product company.

Check my work

8.

value: 10.00 points

Required information

Problem 21-4A Part 5

5.	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.)