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Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income Sales level required in dollars Numerator: $ 1,425,000 1,339,500 3. Compute the sales level required in both dollars and units to earn $120,000 of target income for next year with the machine installed. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage Sales level required in units Numerator: 85,500 27,600 $ 57,900 Denominator: Denominator: = = Sales dollars required = Sales units required

Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income Sales level required in dollars Numerator: $ 1,425,000 1,339,500 3. Compute the sales level required in both dollars and units to earn $120,000 of target income for next year with the machine installed. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage Sales level required in units Numerator: 85,500 27,600 $ 57,900 Denominator: Denominator: = = Sales dollars required = Sales units required

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 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income 3. Compute the sales level required in both dollars and units to earn $120,000 of target income for next year with the machine installed. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage Sales level required in dollars Numerator: $ 1,425,000 1,339,500 85,500 27,600 $ 57,900 Sales level required in units Numerator: Denominator: Denominator: = = Sales dollars required Sales units required
Transcribed Image Text:Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income 3. Compute the sales level required in both dollars and units to earn $120,000 of target income for next year with the machine installed. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage Sales level required in dollars Numerator: $ 1,425,000 1,339,500 85,500 27,600 $ 57,900 Sales level required in units Numerator: Denominator: Denominator: = = Sales dollars required Sales units required
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