Problem 21-3A Break-even analysis: income targeting and strategy c2 CA1 P2 Astro Co. sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year'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 $241,000. The selling price per unit will not change. Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $1,000,000 Variable costs ($40 per unit) 800.000 Contribution margin 200,000 Fixed costs 175.000 Income $ 25.000 Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next vear that shows the penerted results with 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 $241,000. The selling price per unit will not change. Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $1,000,000 Variable costs ($40 per unit) 800.000 Contribution margin 200,000 Fixed costs 175,000 Income $ 25.000 Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000. Check (2) Income, $104,000 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed