Required information

Skip to question

[The following information applies to the questions displayed below.] Astro Company sold 22,000 units of its only product and reported income of $70,200 for the current year. During a planning session for next years activities, the production manager notes that variable costs can be reduced 46% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $154,000. Total units sold and the selling price per unit will not change.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($54 per unit)	$ 1,188,000
Variable costs ($48 per unit)	1,056,000
Contribution margin	132,000
Fixed costs	61,800
Income	$ 70,200

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
Contribution Margin Ratio
	Numerator:	/	Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
Break-even point in dollar sales with new machine:
	Numerator:	/	Denominator:	=	Break-Even Point in Dollars
		/		=	Break-even point in dollars