Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,000,000 Variable costs ($40 per unit) 800,000 Contribution margin 200,000 Fixed costs 175,000 Income $ 25,000 Problem 18-3A (Static) Part 3 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed.
Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,000,000 Variable costs ($40 per unit) 800,000 Contribution margin 200,000 Fixed costs 175,000 Income $ 25,000 Problem 18-3A (Static) Part 3 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CE
Related questions
Question
Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change.
| ASTRO COMPANY | |
| Contribution Margin Income Statement | |
| For Year Ended December 31 | |
| Sales ($50 per unit) | $ 1,000,000 |
|---|---|
| Variable costs ($40 per unit) | 800,000 |
| Contribution margin | 200,000 |
| Fixed costs | 175,000 |
| Income | $ 25,000 |
Problem 18-3A (Static) Part 3
3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed.
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