Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year'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 $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income $ 1,000,000 800,000 200,000 175,000 $ 25,000 Problem 5-3A (Static) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Proposed Fixed costs $ 40 Per unit Variable costs 40 Per unit Contribution Margin Ratio Numerator: 1 $ Break-Even Point in Dollar Sales with New Machine: Numerator: Denominator: 0 Per unit = Contribution Margin Ratio Contribution margin ratio 0 Denominator: = Break-Even Point in Dollars = Break-even point in dollars 0