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