Required information Problem 18-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1 The following information applies to the questions displayed below.) Astro Co sold 20,300 units of its only product and incurred a $78,798 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020'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 $153,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 Sales $767,340 Variable costs 537,138 Contribution margin 230,202 Fixed costs 309,000 Net loss 5 (78,798) Problem 18-4A Part 1 Required information Propiem 18-4A Part 1 Required: 1. Compute the break-even point in dollar sales for 2019. (Round your answers to 2 decimal places.) Contribution Margin Per Unit Current Year 0.00 Contribution Margin Ratio Choose Numerator: 1 Choose Denominator: Contribution Margin Ratio Contribution margin ratio 0 Break Even Point in Dollar Sales: Choose Numerator: Choose Denominator: Break-Even Point in Dollars Break-even point in dollars 0 Problem 18-4A Part 2 2 Compute the predicted break-even point in dollar sales for 2020 assuming the machine is installed and there is no cha unit selling price. (Round your answers to 2 decimal places.) Contribution Margin per unit Proposed 0.00 4. Contribution Margin Ratio Choose Numerator: Choose Denominator: Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Choose Numerator: Choose Denominator: Break-Even Point in Dollars Break-even point in dollars Problem 18-4A Part 3 3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due (Do not round intermediate calculations. Round your answers to the nearest whole dollar) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 0 Contribution margin 0 CO Next > 12 13 14 of 18H Problem 18-4A Part 4 4. Compute the sales level required in both dollars and units to earn $230,000 of target pretax income in 2020 with the machine installed and no change in unit sales price (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage) Salus level required in dollars Choose Numerator: Choose Denominator Sales Dollars Required Sales dollars required Salos lovel required in units Choose Numerator Choose Denominator: Sales Units Required Sales units required Problem 18-4A Part 5 5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due (Do not round intermediate calculations. Round "per unit answers" to 2 decimal places.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 5 Per Unit $ 37.80 hes Contribution margin 0
