Question
Astro Co. sold 20,200 units of its only product and incurred a $51,692 loss (ignoring taxes) for the current year as shown here. During a
Astro Co. sold 20,200 units of its only product and incurred a $51,692 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 $152,000. 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 $ 761,540 Variable costs 609,232 Contribution margin 152,308 Fixed costs 204,000 Net loss $ (51,692 )
Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places 0.00 Margin Ratio Ratio margin ratio k-Even Point in Dollar Sales: Choose Choose Break-Even Point in ontribution margin ratioBreak-even point in dolars 2. Compute the predicted break-even point In dollar sales for year 2018 assuming the machine is Installed and there is no change In the unit selling price. (Round your answers to 2 decimal places margin per Margin Ratio Choose Numerator Margin Ratio margin rato -even point in dollar sales with new Bresk-even point in dolars 3. Prepare a forecasted contribution margin Income statement for 2018 that shows the expected results with the machine Installed. Assume that the unit selling price and the number of unlits sold will not change, and no Income taxes will be due. (Do not round Intermediete calculations. Round your enswers to the nearest whole dollar.) ASTRO C Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 4. Compute the sales level required in both dollars and units to earn $220,000 of target pretax Income in 2018 with the machine installed and no change in unit sales price. (Do not round Intermediate celculations. Round your answers to 2 decimal places Round "Contribution mergin retio" to neerest whole percentage) - Sales dollars required s level required in units Sales units required S. 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) ASTROC Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Per Unit 37.70Step by Step Solution
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