Rivera Co. sold 20,000 units of its only product and incurred a s50,00loss ih roduction managet, income tara current year as shown here. During a planning session for year 2016's activities, thseeral notes that variable costs can be reduced 50% by installing a machine that au To obtain these savings, the company must increase its annual fixed costs by output capacity of the company is 40,000 units per year Problem 18-48 (ignoring taxes) for the production manager Break-even analysis; income targeting and C2 P2 A1 automates several operations. RIVERA COMPANY Contribution Margin Income Statement For Year Ended December 31,20is $750,000 .. . Contribution margin... Fixed costs 150,000 200,000 s (50,000) Required 1. Compute the break-even point in dollar sales for year 2015. 2. Compute the predicted break-even point in dollar sales for year 2016 assuming the machine is installed and no change occurs in the unit selling price. (Round the change in variable costs to a whole number.) 3. Prepare a forecasted contribution margin income statement for 2016 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not (3) Net income Check $100,000 change, and no income taxes will be due. 4. Compute the sales level required in both dollars and units to earn $200,000 of target pretax income in 2016 with the machine installed and no change in unit sales price. (Round answers to whole dollars (4) Required s $916,667 or 24,445 uni both rounded) and whole units.) 5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due