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Required information [The following information applies to the questions displayed below.] Astro Co. sold 20,300 units of its only product and incurred a $78,798 loss
Required information [The following information applies to the questions displayed below.] Astro Co. sold 20,300 units of its only product and incurred a $78,798 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $153,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 Sales $767, 340 Variable costs 537, 138 Contribution margin 230, 202 Fixed costs 309, 000 Net loss $ (78, 798) 4. Compute the sales level required in both dollars and units to earn $230,000 of target pretax income in 2020 with the machine installed and no change in unit sales price. (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 Choose Numerator: 1 Choose Denominator: Sales Dollars Required 1 = Sales dollars required 0 Sales level required in units Choose Numerator: 1 Choose Denominator: Sales Units Required 1 = Sales units required 0
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