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 Contribution margin 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution Margin Ratio Numerator: Contribution margin per unit $ 1,425,000 1,339,500 Total fixed costs 1 85,500 27,600 $ 57,900 Denominator: /Selling price per unit Break-even point in dollar sales with new machine: Numerator: Denominator: 1 Contribution margin ratio Per unit = = Contribution Margin Ratio Contribution margin ratio 0 Break-Even Point in Dollars Break-even point in dollars 0
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 Contribution margin 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution Margin Ratio Numerator: Contribution margin per unit $ 1,425,000 1,339,500 Total fixed costs 1 85,500 27,600 $ 57,900 Denominator: /Selling price per unit Break-even point in dollar sales with new machine: Numerator: Denominator: 1 Contribution margin ratio Per unit = = Contribution Margin Ratio Contribution margin ratio 0 Break-Even Point in Dollars Break-even point in dollars 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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
1. Compute the break-even point in dollar sales for next year assuming the machine is installed.
Note: Round your answers to 2 decimal places.
Contribution margin
Contribution Margin Ratio
Numerator:
Contribution margin per unit
1
Total fixed costs
$ 1,425,000
1,339,500
85,500
27,600
$ 57,900
1
Denominator:
Selling price per unit
Break-even point in dollar sales with new machine:
Numerator:
Denominator:
1 Contribution margin ratio
Per unit
=
=
=
Contribution Margin Ratio
Contribution margin ratio
0
Break-Even Point in Dollars
Break-even point in dollars
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5b2fb6fe-cee9-4c96-8d23-e7499ad59ea3%2F8076e6fb-a83c-4f6b-970b-dae282c9cc82%2F45cg_processed.jpeg&w=3840&q=75)
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
1. Compute the break-even point in dollar sales for next year assuming the machine is installed.
Note: Round your answers to 2 decimal places.
Contribution margin
Contribution Margin Ratio
Numerator:
Contribution margin per unit
1
Total fixed costs
$ 1,425,000
1,339,500
85,500
27,600
$ 57,900
1
Denominator:
Selling price per unit
Break-even point in dollar sales with new machine:
Numerator:
Denominator:
1 Contribution margin ratio
Per unit
=
=
=
Contribution Margin Ratio
Contribution margin ratio
0
Break-Even Point in Dollars
Break-even point in dollars
0
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