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Required information [The following information applies to the questions displayed below.) Astro Company sold 27,500 units of its only product and reported income of $67,000
Required information [The following information applies to the questions displayed below.) Astro Company sold 27,500 units of its only product and reported income of $67,000 for the current year. During a planning session for next year'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 $144,000. 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) $ 1,375,000 Variable costs ($45 per unit) 1,237,500 Contribution margin 137,500 Fixed costs 70,500 Income $ 67,000 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Proposed Contribution Margin per unit Sales Variable costs Contribution margin Contribution Margin Ratio 0.00 Numerator: Denominator: = Contribution Margin Ratio Contribution margin per unit 1 Selling price per unit E Contribution margin ratio 0 Break-even point in dollar sales with new machine: Numerator: 1 Denominator: = Total fixed costs / Contribution margin ratio Break-Even Point in Dollars Break-even point in dollars 0
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