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Problem 21-4A Break-even analysis, income targeting and forecasting LO C2, P2, A1 IThe following information applies to the questions displayed below.J Astro Co. sold 19,800
Problem 21-4A Break-even analysis, income targeting and forecasting LO C2, P2, A1 IThe following information applies to the questions displayed below.J Astro Co. sold 19,800 units of its only product and incurred a $48,292 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016'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 $148,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015 738,540 Sales Variable costs 590,832 147708 Contribution margin Fixed costs 196,000 (48,292) Net loss
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