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Astro Company sold 23,500 units of its only product and reported income of $186,000 for the current year. During a planning session for next year's
Astro Company sold 23,500 units of its only product and reported income of $186,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 43% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $157,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($57 per unit) $ 1,339,500 Variable costs ($37 per unit) 869,500 Contribution margin 470,000 Fixed costs 284,000 Income $ 186,000 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Proposed $ 0.00 Contribution Margin per unit Sales Variable costs Contribution margin Contribution Margin Ratio Numerator: Contribution margin per unit Denominator: Contribution Margin Ratio Variable costs per unit Contribution margin ratio Break-even point in dollar sales with new machine: Numerator: Total fixed costs Contribution margin ratio Denominator: Break-Even Point in Dollars Break-even point in dollars 0
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