Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Required information [The following information applies to the questions displayed below.] Astro Co. sold 19,600 units of its only product and incurred a $46,568 loss
Required information [The following information applies to the questions displayed below.] Astro Co. sold 19,600 units of its only product and incurred a $46,568 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 $146,000. 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 $ 727,160 Variable costs 581,728 Contribution margin 145,432 Fixed costs 192,000 Net loss $ (46,568) 2. Compute the predicted break-even point in dollar sales for 2020 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.) Contribution Margin per unit Proposed Contribution Margin Ratio Choose Numerator: 1 Choose Denominator: Contribution Margin Ratio Contribution margin ratio Break-even point in dollar sales with new machine: Choose Numerator: 1 Choose Denominator: Break-Even Point in Dollars / = Break-even point in dollars
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started