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Problem 18-3A (Algo) Break-even analysis; income targeting and strategy

Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 (The following information applies to the questions displayed below.] Astro Company sold 29.500 units of its only product and reported income of $234,000 for the current year. During a planning session for next year'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 $180,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($60 per unit) $ 1,770,000 Variable costs ($48 per unit) 1,416,000 Contribution margin 354,000 Fixed costs 120,000 Income $ 234,000 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: 1 Denominator: = Break-Even Point in Dollars Break-even point in dollars / Astro Company sold 29,500 units of its only product and reported income of $234,000 for the current year. During a planning session for next year'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 $180,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($60 per unit) $ 1,770,000 Variable costs ($48 per unit) 1,416,000 Contribution margin 354,000 Fixed costs 120,000 Income $ 234,000 Problem 18-3A (Algo) Part 2 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,770,000. (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 0 $ 0 Astro Company sold 29,500 units of its only product and reported income of $234,000 for the current year. During a planning session for next year'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 $180,000. Total units sold and the selling price per unit will not change ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($60 per unit) $ 1,770,000 Variable costs ($48 per unit) 1,416,000 Contribution margin 354,000 Fixed costs 120,000 Income $ 234,000 Problem 18-3A (Algo) Part 3 Problem 18-3A (Algo) Part 3 3. Compute the sales level required in both dollars and units to earn $100,000 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) Sales level required in dollars Numerator: Denominator: Sales dollars required Sales level required in units Numerator: Denominator Sales units required 0