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 27,000 units of its only product and reported income of $190,300 for the current year. During a planning session for next year'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 $145,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($55 per unit) Variable costs ($44 per unit) Contribution margin Fixed costs Income $ 1,485,000 1,188,000 297,000 106,700 $ 190,300 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 $ 55.00 Per unit 24.64 Per unit Sales Variable costs Contribution margin $ Contribution Margin Ratio 30.36 Per unit places.) Contribution Margin per unit Sales Variable costs Contribution margin Contribution Margin Ratio Proposed $ 55.00 Per unit 24.64 Per unit 30.36 Per unit Numerator: Denominator: Contribution Margin Ratio Contribution margin per unit Selling price per unit Contribution margin ratio 0 Break-even point in dollar sales with new machine: Numerator: Total fixed costs Denominator: Break-Even Point in Dollars = Break-even point in dollars 0 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,485,000. (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 3. Compute the sales level required in both dollars and units to earn $150,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage) Sales level required in dollars Numerator: Denominator: Sales dollars required Sales level required in units Numerator: Denominator: Sales units required