Required information

Problem 21-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2

Skip to question

[The following information applies to the questions displayed below.] Astro Company sold 25,000 units of its only product and reported income of $117,600 for the current year. During a planning session for next years 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 $149,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($40 per unit)	$ 1,000,000
Variable costs ($32 per unit)	800,000
Contribution margin	200,000
Fixed costs	82,400
Income	$ 117,600

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 $1,000,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)