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) $ 1,000,000 Variable costs ($40 per unit) 800,000 Contribution margin 200,000 Fixed costs 175,000 Income $ 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: 1 Denominator: 1 = Sales dollars required Sales level required in units Numerator: 1 Denominator: = / = Sales units required Praveen Company manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding that has not been as profitable as planned. Because Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per unit. Its fixed costs for the year are expected to be $270,000. Variable costs for the year are expected to be $140 per unit. stimate Product XT's break-even point in terms of sales units and sales dollars. ontribution Margin per unit Contribution margin ontribution Margin ratio Numerator: Denominator: / Contribution margin ratio a) Estimate Product XT's break-even point in terms of sales units. Numerator: 1 Denominator: Break-even units b) Estimate Product XT's break-even point in terms of sales dollars. Numerator: Denominator: Break-even dollars 2. Prepare a contribution margin income statement for Product XT at the break-even point. PRAVEEN COMPANY Contribution Margin Income Statement (at Break-Even) - Product XT Units $ per unit Total Contribution margin Income