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3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due.

3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Required Information #### Context Astro Co. sold 20,000 units of its only product and incurred a $50,000 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 by 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $200,000. The maximum output capacity of the company is 40,000 units per year. #### Contribution Margin Income Statement for Year Ended December 31, 2019 | Description | Amount | |------------------------|-------------| | Sales | $1,000,000 | | Variable costs | $800,000 | | Contribution margin | $200,000 | | Fixed costs | $250,000 | | Net loss | $(50,000) | ### Task 3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due. #### Forecasted Contribution Margin Income Statement for Year Ended December 31, 2020 (Astro Company) (Note: The specific numbers for the forecasted statement are not provided in the image. Please compute based on the given assumptions and information.)
Transcribed Image Text:### Required Information #### Context Astro Co. sold 20,000 units of its only product and incurred a $50,000 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 by 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $200,000. The maximum output capacity of the company is 40,000 units per year. #### Contribution Margin Income Statement for Year Ended December 31, 2019 | Description | Amount | |------------------------|-------------| | Sales | $1,000,000 | | Variable costs | $800,000 | | Contribution margin | $200,000 | | Fixed costs | $250,000 | | Net loss | $(50,000) | ### Task 3. Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due. #### Forecasted Contribution Margin Income Statement for Year Ended December 31, 2020 (Astro Company) (Note: The specific numbers for the forecasted statement are not provided in the image. Please compute based on the given assumptions and information.)
Certainly! Here's a transcription suitable for an educational website: --- ### Contribution Margin Income Statement Analysis **Contribution Margin Income Statement for the Year Ended December 31, 2019:** - **Sales:** $1,000,000 - **Variable Costs:** $800,000 - **Contribution Margin:** $200,000 - **Fixed Costs:** $250,000 - **Net Loss:** $(50,000) **Task:** Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with a machine installed. Assume the unit selling price and the number of units sold will not change, and no income taxes will be due. **Astro Company Forecasted Contribution Margin Income Statement for the Year Ended December 31, 2020:** <table> <tr> <th>Contribution Margin</th> </tr> <tr> <td></td> </tr> </table> --- This image presents the historical financial data for Astro Company for the year 2019 and invites forecasting for the year 2020 with anticipated adjustments. The projected table for 2020 awaits data input, focusing on the contribution margin analysis.
Transcribed Image Text:Certainly! Here's a transcription suitable for an educational website: --- ### Contribution Margin Income Statement Analysis **Contribution Margin Income Statement for the Year Ended December 31, 2019:** - **Sales:** $1,000,000 - **Variable Costs:** $800,000 - **Contribution Margin:** $200,000 - **Fixed Costs:** $250,000 - **Net Loss:** $(50,000) **Task:** Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with a machine installed. Assume the unit selling price and the number of units sold will not change, and no income taxes will be due. **Astro Company Forecasted Contribution Margin Income Statement for the Year Ended December 31, 2020:** <table> <tr> <th>Contribution Margin</th> </tr> <tr> <td></td> </tr> </table> --- This image presents the historical financial data for Astro Company for the year 2019 and invites forecasting for the year 2020 with anticipated adjustments. The projected table for 2020 awaits data input, focusing on the contribution margin analysis.
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