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Blue Company sold 30,000 units of its only product and incurred a $85,000 loss (ignoring taxes) for the current year as shown here. During a

Blue Company sold 30,000 units of its only product and incurred a $85,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 25% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $175,000. The maximum output capacity of the company is 55,000 units per year.

Blue Company

Contribution Margin Income Statement

For Year Ending December 31, 2019

Sales

$900,000

Variable

$680,000

Contribution Margin

$220,000

Fixed Cost

$305,000

Net Loss

$(85,000)

  1. Compute the break-even point in dollar sales for year 2019.(Round your answers to 2 decimal places.)
  2. Compute the predicted break-even point in dollar sales for year 2020 assuming the machine is installed and there is no change in the unit selling price.(Round your answers to 2 decimal places.)

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