CHAPTER 18

5.Required information

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[The following information applies to the questions displayed below.] Astro Company sold 21,500 units of its only product and reported income of $68,600 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 47% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($53 per unit)	$ 1,139,500
Variable costs ($46 per unit)	989,000
Contribution margin	150,500
Fixed costs	81,900
Income	$ 68,600

1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.)

	Contribution Margin per unit		Proposed
Contribution Margin Ratio
	Numerator:	/	Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
Break-even point in dollar sales with new machine:
	Numerator:	/	Denominator:	=	Break-Even Point in Dollars
		/		=	Break-even point in dollars

6.

Required information

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[The following information applies to the questions displayed below.] Astro Company sold 21,500 units of its only product and reported income of $68,600 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 47% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($53 per unit)	$ 1,139,500
Variable costs ($46 per unit)	989,000
Contribution margin	150,500
Fixed costs	81,900
Income	$ 68,600

2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,139,500. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Contribution margin

7.

Required information

Skip to question

[The following information applies to the questions displayed below.] Astro Company sold 21,500 units of its only product and reported income of $68,600 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 47% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($53 per unit)	$ 1,139,500
Variable costs ($46 per unit)	989,000
Contribution margin	150,500
Fixed costs	81,900
Income	$ 68,600

3. Compute the sales level required in both dollars and units to earn $230,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage)