1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
2
![Astro Company sold 29,000 units of its only product and reported income of $37,800 for the current year. During a
planning session for next year'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 $141,000. Total units sold and the selling price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($50 per unit)
Variable costs ($48 per unit)
Contribution margin
Fixed costs
Income
1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
places.)
Contribution Margin per unit
Contribution Margin Ratio
Numerator:
1
"
$
$ 1,450,000
1,392,000
58,000
20, 200
$ 37,800
Break-even point in dollar sales with new machine:
Numerator:
I
1
Proposed
Denominator:
Denominator:
0.00
= Contribution Margin Ratio
= Contribution margin ratio
Break-Even Point in Dollars
Break-even point in dollars
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1799000-33ab-4b28-9bb2-f03cfa8defbf%2F3749f87f-2928-4b5a-8fcb-218e86b5764a%2Fu9squ4k_processed.png&w=3840&q=75)
Transcribed Image Text:Astro Company sold 29,000 units of its only product and reported income of $37,800 for the current year. During a
planning session for next year'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 $141,000. Total units sold and the selling price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($50 per unit)
Variable costs ($48 per unit)
Contribution margin
Fixed costs
Income
1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
places.)
Contribution Margin per unit
Contribution Margin Ratio
Numerator:
1
"
$
$ 1,450,000
1,392,000
58,000
20, 200
$ 37,800
Break-even point in dollar sales with new machine:
Numerator:
I
1
Proposed
Denominator:
Denominator:
0.00
= Contribution Margin Ratio
= Contribution margin ratio
Break-Even Point in Dollars
Break-even point in dollars
0
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