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! Required information (The following information applies to the questions displayed below.) Astro Company sold 28,000 units of its only product and reported income of
! Required information (The following information applies to the questions displayed below.) Astro Company sold 28,000 units of its only product and reported income of $161,000 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 $143,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) $ 1,568,000 Variable costs ($42 per unit) 1,176,000 Contribution margin 392,000 Fixed costs 231,000 Income $ 161,000 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 $ 0.00 Contribution Margin Ratio Numerator: 1 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 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,568,000. (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 3. Compute the sales level required in both dollars and units to earn $130,000 of target income for next year with the machine installed. (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: 1 Sales dollars required Sales level required in units Numerator: / Denominator: 1 = Sales units required
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