! Required information Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 26,000 units of its only product and reported income of $114,100 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $147,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($42 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,092,000 910,000 182,000 67,900 $ 114,100 Problem 21-3A (Algo) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution margin Per unit Contribution Margin Ratio Problem 21-3A (Algo) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution margin Contribution Margin Ratio Numerator: Per unit I Denominator: = Contribution Margin Ratio = Contribution margin ratio 0 Break-even point in dollar sales with new machine: Numerator: Denominator: = Break-Even Point in Dollars = Break-even point in dollars 0 Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 26,000 units of its only product and reported income of $114,100 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $147,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($42 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,092,000 910,000 182,000 67,900 $ 114,100 Problem 21-3A (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 $1,092,000. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Problem 21-3A (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 $1,092,000. Note: 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 Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 26,000 units of its only product and reported income of $114,100 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $147,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($42 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,092,000 910,000 182,000 67,900 $ 114,100 Problem 21-3A (Algo) Part 3 3. Compute the sales level required in both dollars and units to earn $170,000 of target income for next year with the machine installed. Note: 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 Problem 21-3A (Algo) Part 3 3. Compute the sales level required in both dollars and units to earn $170,000 of target income for next year with the machine installed. Note: 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 0 Sales level required in units Numerator: Denominator: = Sales units required 0