of its Astro Co. and units of its only product and incurred a $44,828 loss (ignoring taxes) for the current 19,400 year as shown here. During a planning session for year 2016'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 $144,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income statement For Year Ended December 31, 2015 715,860 Sales 572,688 Variable costs 143172 Contribution margin Fixed costs 188,000 (44,828) Net loss