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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

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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 Company sold 21,500 units of its only product and reported income of $68,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 47% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement Por Year Ended December 31 Sales ($53 per unit) $ 1,139,500 Variable costs ($46 per unit) 989,000 Contribution margin 150,500 Fixed costs 81,900 Income $ 68,600 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 Sales $ 52.98 Per unit Variable costs 46.00 Per unit Contribution margin $ 6.98 Per unit Contribution Margin Ratio Numerator: Denominator: Contribution Margin Ratio Contribution margin per unit Selling price per unit Contribution margin ratio 150,500.00 1,139,500.00 - 13.21% Break-even point in dollar sales with new machine: Numerator: 1 Denominator: Break-Even Point in Dollars Fixed costs per unit 1 Contribution margin ratio 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 $1,139,500. (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 Problem 18-3A (Algo) Part 3 3. Compute the sales level required in both dollars and units to earn $230,000 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

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