Question
Astro Company sold 26,500 units of its only product and reported income of $246,000 for the current year. During a planning session for next years
Astro Company sold 26,500 units of its only product and reported income of $246,000 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 60% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,325,000 Variable costs ($35 per unit) 927,500 Contribution margin 397,500 Fixed costs 151,500 Income $ 246,000 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.)
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