> ezto.mheducation.com C + 88 Ch.5 Homework Assignment i Saved Help Save & Exit Submit Check my work 9 Required information Part 1 of 3 Problem 5-3A (Static) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] 4 Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a points planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY eBook Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1, 000, 000 Variable costs ($40 per unit) 800, 000 Print Contribution margin 200, 000 Fixed costs 175, 000 Income $ 25, 000 Problem 5-3A (Static) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Proposed Sales $ 50 Per unit Variable costs 40 Per uni Contribution margin $ 10 Per unit Contribution Margin Ratio Numerator: Denominator: Contribution Margin Ratio Contribution margin per unit Selling price per unit = Contribution margin ratio Mc Graw HillI) i E E ezto.mheducation.corn C I Ch.5 Homework Assignment 0 Saved Help 10 "cum-cu Iu Problem 5-3A (Static) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below] Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual xed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,000,000 Variable costs ($40 per unit) 800,000 Contribution margin 200,000 Fixed costs 175,000 Income $ 25,000 Problem 5-3A (Static) Part 2 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000. 7CD ( Prev 10 11 of 13 Next ) Save & Exit Submit Check my work m + DE DE ezto.mheducation.com C + 88 Ch.5 Homework Assignment i Saved Help Save & Exit Submit Check my work 11 The following information applies to the questions displayed below.] Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by Part 3 of 3 installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY 5 Contribution Margin Income Statement points For Year Ended December 31 Sales ($50 per unit) $ 1, 000, 000 Variable costs ($40 per unit) 800, 000 Contribution margin 200, 000 Fixed costs 175, 000 Income $ 25, 000 eBook Print Problem 5-3A (Static) Part 3 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed. Sales level required in dollars Numerator: Denominator: = Sales dollars required 0 Sales level required in units Numerator: Denominator: = Sales units required 0 Mc Graw Hill