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[The following information applies to the questions displayed below. Astro Co. sold 19,000 units of its only product and incurred a $128,000 loss (ignoring taxes)

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[The following information applies to the questions displayed below. Astro Co. sold 19,000 units of its only product and incurred a $128,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016's activities, the production manager notes that variable costs can be reduced 30% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $140,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statenent For Year Ended December 31, 2015 Sales Variable costs $760,000 608,000 Contribution margin Fixed costs 52,000 280,000 Net loss $(128,000)

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