question 2

Required information [The following information applies to the questions displayed below.) Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 44% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) $ 1,288,000 Variable costs ($35 per unit) 805,000 Contribution margin 483,000 Fixed costs 218,400 Income $ 264,600 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Per unit Contribution margin Contribution Margin Ratio Numerator: 1 Denominator: Contribution margin per unit 1 Selling price per unit = Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Numerator: 1 Denominator: Total fixed costs Contribution margin ratio Break-Even Point in Dollars Break-even point in dollars = Required information [The following information applies to the questions displayed below.) Astro Company sold 23,000 units of its only product and reported income of $264,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 44% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) $ 1,288,000 Variable costs $35 per unit) 805,000 Contribution margin 483,000 Fixed costs 218,400 Income $ 264,600 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,288,000. (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 ! Required information [The following information applies to the questions displayed below.) Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (10,100 units at $300 each) Variable costs (10,100 units at $240 each) Contribution margin Fixed costs Income $ 3,030,000 2,424,000 606,000 468,000 $ 138,000 1. Assume Hudson has a target income of $167,000. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Dollar sales for target income 2. Margin of safety %