Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(The following information applies to the questions displayed below.) Astro Co. sold 19,800 units of its only product and incurred a $48,292 loss (ignoring taxes)

image text in transcribed
image text in transcribed
(The following information applies to the questions displayed below.) Astro Co. sold 19,800 units of its only product and incurred a $48,292 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 $148,000. 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 $738,540 Variable costs 590,832 Contribution margin 147, 708 Fixed costs 196,000 Net loss ${48,292) Compute the sales level required in both dollars and units to earn $180,000 of target pretax income in 2020 with the machine stalled and no change in unit sales price. (Do not round intermediate calculations. Round your answers to 2 decimal places. und "Contribution margin ratio" to nearest whole percentage) 4. Compute the sales level required in both dollars and units to earn $180,000 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: Choose Denominator - Sales Dollars Required Sales dollars required Sales level required in units Choose Numerator Choose Denominator: Sales Units Required Sales units required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Advances In Behavioral Research

Authors: Lawrence A. Ponemon, David R.L. Gabhart

1st Edition

0387976191, 978-0387976198

More Books

Students also viewed these Accounting questions

Question

Evaluating Group Performance?

Answered: 1 week ago