Question
Required information [The following information applies to the questions displayed below.] Astro Company sold 26,500 units of its only product and reported income of
Required information [The following information applies to the questions displayed below.] Astro Company sold 26,500 units of its only product and reported income of $246,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 60% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,325,000 927,500 397,500 151,500 $ 246,000 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 $ Contribution Margin Ratio Numerator: Break-even point in dollar sales with new machine: Numerator: 0.00 Denominator: = Contribution Margin Ratio = Contribution margin ratio Denominator: Break-Even Point in Dollars Break-even point in dollars
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