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 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 2016'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 $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 Variable costs $755,760 566,820 Contribution margin Fixed costs 2h2.MX) Net loss $(63,560)