Old MathJax webview

Old MathJax webview

Astro Co. sold 19,700 units of its only product and incurred a $59,290 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 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $147,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 Sales $ 732,840 Variable costs 549,630 Contribution margin 183,210 Fixed costs 242,500 Net loss $ (59,290) Problem 05-4A Part 2 2. Compute the predicted break-even point in dollar sales for 2020 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.) Proposed Contribution Margin per unit Sales Variable costs $ 0.00 Contribution margin Contribution Margin Ratio Choose Numerator: Choose Denominator: Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Choose Numerator: Choose Denominator: = Break-Even Point in Dollars Break-even point in dollars 0 3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Fixed costs Contribution margin