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Astro Company sold 25,000 units of its only product and reported income of $117,600 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 annu- fixed costs by $149,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($40 per unit) Variable costs ($32 per unit) Contribution margin $ 1,000,000 800,000 200,000 82,400 $ 117,600 Fixed costs Income Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 d aces.) Answer is complete but not entirely correct. Contribution Margin per Proposed unit Sales 40.00 Per unit Variable costs 12.80 Per unit Contribution margin 27.20 Per unit

Astro Company sold 25,000 units of its only product and reported income of $117,600 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 annu- fixed costs by $149,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($40 per unit) Variable costs ($32 per unit) Contribution margin $ 1,000,000 800,000 200,000 82,400 $ 117,600 Fixed costs Income Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 d aces.) Answer is complete but not entirely correct. Contribution Margin per Proposed unit Sales 40.00 Per unit Variable costs 12.80 Per unit Contribution margin 27.20 Per unit

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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Astro Company sold 25,000 units of its only product and reported income of $117,600 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 annue fixed costs by $149,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($40 per unit) Variable costs ($32 per unit) Contribution margin Fixed costs $ 1,000,000 800,000 200,000 82,400 $ 117,600 Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 de places.) Answer is complete but not entirely correct. Contribution Margin per unit Proposed Sales 40.00 Per unit Variable costs 12.80 Per unit Contribution margin 27.20 Per unit < Prev 5. 6 7. of 10 Next>
Transcribed Image Text:Astro Company sold 25,000 units of its only product and reported income of $117,600 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 annue fixed costs by $149,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($40 per unit) Variable costs ($32 per unit) Contribution margin Fixed costs $ 1,000,000 800,000 200,000 82,400 $ 117,600 Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 de places.) Answer is complete but not entirely correct. Contribution Margin per unit Proposed Sales 40.00 Per unit Variable costs 12.80 Per unit Contribution margin 27.20 Per unit < Prev 5. 6 7. of 10 Next>
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