Astro Co sold 20,700 units of its only product and incurred a $83.778 loss ignoring taxes) for the current year as shown here. During a planning session for year 2018's 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 $157,000. 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 $ 790,740 Variable costs 553,518 Contribution margin 237.222 Fixed costs 321.000 Net loss $ (83,778) Problem 18-4A Part 1 Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.) Answer is not complete. Contribution Margin Per Current Sales Variable costs Contribution margin Contribution Margin Ratio 3.33 X 2.33 1.00 Per unit Per unit Per unit Choose Numerator: Choose Denominator: Sales per unit Contribution margin per unit - Contribution Margin Ratio Contribution margin ratio 0 Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.) Answer is not complete. Contribution Margin Per Ini Current 3.33 2.33 1.00 Per unit Per unit Per unit Sales Variable costs Contribution margin Contribution Margin Ratio Choose Numerator: Contribution margin per unit Contribution Margin Ratio Choose Denominator: Sales per unit Contribution margin ratio Break-Even Point in Dollar Sales: Choose Numerator: Total fixed costs 321,0001 Choose Denominator: Contribution margin ratio Break-Even Point in Dollars Break-even point in dollars 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.) Contribution margin per unit Proposed 0.00 Contribution Margin Ratio Choose Numerator: Choose Denominator: - Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Choose Numerator: Choose Denominator: - Break-Even Point in Dollars Break-even point in dollars 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 units sold will not change, and no Income taxes will be due (Do not found Intermediate calculations. Round your answers to the nearest whole dollar.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Contribution margin 4. Compute the sales level required in both dollars and units to earn $270,000 of target pretax income in 2018 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 Numerator: Choose Denominator - Sales dollars required = Sales dollars required Sales level required in units Choose Numerator: Choose Denominator: - Sales units required = Sales units required 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.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 $ Per Unit $ 38.20 Contribution margin
