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Astro Company sold 29,500 units of its only product and reported income of $234,000 for the current year. During a planning session for next year's
Astro Company sold 29,500 units of its only product and reported income of $234,000 for the current year. During a planning session for next year'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 $180,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($60 per unit) Variable costs ($48 per unit) Contribution margin Fixed costs Income 3. Compute the sales level required in both dollars and units to earn $100,000 of target income for next year with th machine installed. (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 Numerator: Sales level required in units Numerator: 1 $ 1,770,000 1,416,000 354,000 120,000 $ 234,000 1 1 Denominator: Denominator: Sales dollars required = Sales units required
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