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**Required Information** *[The following information applies to the questions displayed below.]* 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 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. **ASTRO COMPANY** Contribution Margin Income Statement For 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 that shows the results at the sales level computed in part 4. Assume no income taxes will be due. *(Round your intermediate calculation and final answers to the nearest whole dollar.)* --- **Explanation of Graph/Diagram** The task is to prepare a forecasted contribution margin income statement for Astro Company using provided information about future cost changes and increased fixed costs due to machinery automation. **Contribution Margin Income Statement for Year Ended December 31, 2019** - **Sales**: $1,000,000 - **Variable Costs**: $800,000 - **Contribution Margin**: $200,000 - **Fixed Costs**: $250,000 - **Net Loss**: $(50,000) **Task 5**: Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due. (Round your intermediate calculations and final answers to the nearest whole dollar.) --- **ASTRO COMPANY** **Forecasted Contribution Margin Income Statement** **For Year Ended December 31, 2020** | **$ Per Unit** | **$** | |----------------|-------------| | Sales | $50 | | | | | Contribution Margin | | --- To complete this task, insert the values for sales and contribution margin as you compute them based on the given information and assumptions.

**Required Information** *[The following information applies to the questions displayed below.]* 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 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. **ASTRO COMPANY** Contribution Margin Income Statement For 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 that shows the results at the sales level computed in part 4. Assume no income taxes will be due. *(Round your intermediate calculation and final answers to the nearest whole dollar.)* --- **Explanation of Graph/Diagram** The task is to prepare a forecasted contribution margin income statement for Astro Company using provided information about future cost changes and increased fixed costs due to machinery automation. **Contribution Margin Income Statement for Year Ended December 31, 2019** - **Sales**: $1,000,000 - **Variable Costs**: $800,000 - **Contribution Margin**: $200,000 - **Fixed Costs**: $250,000 - **Net Loss**: $(50,000) **Task 5**: Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due. (Round your intermediate calculations and final answers to the nearest whole dollar.) --- **ASTRO COMPANY** **Forecasted Contribution Margin Income Statement** **For Year Ended December 31, 2020** | **$ Per Unit** | **$** | |----------------|-------------| | Sales | $50 | | | | | Contribution Margin | | --- To complete this task, insert the values for sales and contribution margin as you compute them based on the given information and assumptions.

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** *[The following information applies to the questions displayed below.]* 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 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. **ASTRO COMPANY** Contribution Margin Income Statement For 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 that shows the results at the sales level computed in part 4. Assume no income taxes will be due. *(Round your intermediate calculation and final answers to the nearest whole dollar.)* --- **Explanation of Graph/Diagram** The task is to prepare a forecasted contribution margin income statement for Astro Company using provided information about future cost changes and increased fixed costs due to machinery automation.
Transcribed Image Text:**Required Information** *[The following information applies to the questions displayed below.]* 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 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. **ASTRO COMPANY** Contribution Margin Income Statement For 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 that shows the results at the sales level computed in part 4. Assume no income taxes will be due. *(Round your intermediate calculation and final answers to the nearest whole dollar.)* --- **Explanation of Graph/Diagram** The task is to prepare a forecasted contribution margin income statement for Astro Company using provided information about future cost changes and increased fixed costs due to machinery automation.
**Contribution Margin Income Statement for Year Ended December 31, 2019** - **Sales**: $1,000,000 - **Variable Costs**: $800,000 - **Contribution Margin**: $200,000 - **Fixed Costs**: $250,000 - **Net Loss**: $(50,000) **Task 5**: Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due. (Round your intermediate calculations and final answers to the nearest whole dollar.) --- **ASTRO COMPANY** **Forecasted Contribution Margin Income Statement** **For Year Ended December 31, 2020** | **$ Per Unit** | **$** | |----------------|-------------| | Sales | $50 | | | | | Contribution Margin | | --- To complete this task, insert the values for sales and contribution margin as you compute them based on the given information and assumptions.
Transcribed Image Text:**Contribution Margin Income Statement for Year Ended December 31, 2019** - **Sales**: $1,000,000 - **Variable Costs**: $800,000 - **Contribution Margin**: $200,000 - **Fixed Costs**: $250,000 - **Net Loss**: $(50,000) **Task 5**: Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no income taxes will be due. (Round your intermediate calculations and final answers to the nearest whole dollar.) --- **ASTRO COMPANY** **Forecasted Contribution Margin Income Statement** **For Year Ended December 31, 2020** | **$ Per Unit** | **$** | |----------------|-------------| | Sales | $50 | | | | | Contribution Margin | | --- To complete this task, insert the values for sales and contribution margin as you compute them based on the given information and assumptions.
Expert Solution
Step 1

Calculation of new Fixed Cost:

=Old Fixed Cost + New Fixed Cost=$250,000+$2,00,000=$450,000

 

New Variable Cost Per Unit:

=50% of Existing variable costunits=$800,000×50%20,000=$20/-

 

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