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Required information Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.) Astro
Required information Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.) Astro Company sold 24,000 units of its only product and reported income of $174,800 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 42% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $158,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($58 per unit) Variable costs (539 per unit) Contribution margin Fixed costs Incone $ 1,392,000 936,000 456,000 281,200 $174,800 Problem 18-3A (Algo) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Contribution Margin per unit Proposed Contribution Margin Ratio Numerator Denominator Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Numerator Denominator Break-Even Point in Dollars Break-even point in dollars Required information Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 (The following information applies to the questions displayed below.] Astro Company sold 24,000 units of its only product and reported income of $174,800 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 42% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $158,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($58 per unit) Variable costs ($39 per unit) Contribution margin Fixed costs Income $ 1,392,000 936,000 456,000 281,200 $174,800 Problem 18-3A (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 $1,392,000. (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 $
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