! Required information [The following information applies to the questions displayed below.] Astro Company sold 20,000 units of its only product and reported income of $25,000 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 $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income $ 1,000,000 800,000 200,000 175,000 $ 25,000 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed. Sales level required in dollars Numerator: Contribution margin $ Sales level required in units Numerator: Contribution margin 1 Denominator: 1 520,000 1 = 20,000% = $ 1 Denominator: 1 Selling price per unit = 26 $ 50 = Sales dollars required 2,600 Sales units required 1 units