Question
Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company
Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 23,500 units of its only product and reported income of $186,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 43% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $157,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($57 per unit) Variable costs ($37 per unit) Contribution margin Fixed costs Income $ 1,339,500 869,500 470,000 284,000 $ 186,000
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