Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Astro Co. sold 20,500 units of its only product and incurred a $67,750 loss (ignoring taxes) for the current year, as shown here. During a

image text in transcribed
Astro Co. sold 20,500 units of its only product and incurred a $67,750 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020'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 $155,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement Tor Year Ended December 31, 2019 Sales $779,000 Variable costs 584,250 Contribution margin 194,750 Pixed costs 262,500 Net loss $(67,750) 4. Compute the sales level required in both dollars and units to earn $250,000 of target pretax income in 2020 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) Sales level required in dollars Choose Numeratori Choose Denominator: Sales Dollars Required Sales dollars required Sales level required in units Choose Numerator: Choose Denominator Sales Units Required Sales units required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions