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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) Variable costs ($40 per unit) Contribution margin Fixed costs Income Sales level required in dollars Numerator: 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. Sales level required in units Numerator: 1 $ 1,000,000 1 800,000 200,000 175,000 $ 25,000 Denominator: Denominator: Sales dollars required + Sales units required

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) Variable costs ($40 per unit) Contribution margin Fixed costs Income Sales level required in dollars Numerator: 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. Sales level required in units Numerator: 1 $ 1,000,000 1 800,000 200,000 175,000 $ 25,000 Denominator: Denominator: Sales dollars required + Sales units required

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 14PA: Summarized data for Walrus Co. for its first year of operations are: A. Prepare an income statement...
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2 LIF IVωνιψιιιωιιιαιιι αμμικό fit this playeu uciuw. 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 F2 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin W Fixed costs Income installed. 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine Sales level required in dollars Numerator: Sales level required in units Numerator: #3 80 F3 E $ 4 1 1 1 F4 $ 1,000,000 800,000 200,000 175,000 $ 25,000 R % 5 Denominator: Denominator: F5 < Prev T 1 6 || = ၆ F6 Sales dollars required V + 3 of 3 Sales units required & 7 F7 Next 8 게 F8 ( 9 F
Transcribed Image Text:2 LIF IVωνιψιιιωιιιαιιι αμμικό fit this playeu uciuw. 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 F2 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin W Fixed costs Income installed. 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine Sales level required in dollars Numerator: Sales level required in units Numerator: #3 80 F3 E $ 4 1 1 1 F4 $ 1,000,000 800,000 200,000 175,000 $ 25,000 R % 5 Denominator: Denominator: F5 < Prev T 1 6 || = ၆ F6 Sales dollars required V + 3 of 3 Sales units required & 7 F7 Next 8 게 F8 ( 9 F
mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fbb.johnstoncc. ment ! Required information [The following information applies to the questions displayed ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income 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. below.] $ 1,000,000 800,000 200,000 175,000 $ 25,000 Saved
Transcribed Image Text:mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fbb.johnstoncc. ment ! Required information [The following information applies to the questions displayed ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income 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. below.] $ 1,000,000 800,000 200,000 175,000 $ 25,000 Saved
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