Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2

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Astro Company sold 21,500 units of its only product and reported income of $68,600 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 47% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($53 per unit)	$ 1,139,500
Variable costs ($46 per unit)	989,000
Contribution margin	150,500
Fixed costs	81,900
Income	$ 68,600

Problem 21-3A (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 $1,139,500.