Astro Company sold 29,000 units of its only product and reported income of $37,800 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 $141,000. 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 ($48 per unit) Contribution margin Fixed costs Income $ 1,450,000 1,392,000 58,000 20, 200 $ 37,800 3. Compute the sales level required in both dollars and units to earn $110,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Astro Company sold 29,000 units of its only product and reported income of $37,800 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 $141,000. 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 ($48 per unit)
Contribution margin
Fixed costs
Income
3. Compute the sales level required in both dollars and units to earn $110,000 of target income for next year with the machine
installed. (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:
Sales level required in units
Numerator:
$ 1,450,000
1,392,000
58,000
20, 200
$ 37,800
1
Denominator:
Denominator:
= Sales dollars required
= Sales units required
0
Transcribed Image Text:Astro Company sold 29,000 units of its only product and reported income of $37,800 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 $141,000. 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 ($48 per unit) Contribution margin Fixed costs Income 3. Compute the sales level required in both dollars and units to earn $110,000 of target income for next year with the machine installed. (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: Sales level required in units Numerator: $ 1,450,000 1,392,000 58,000 20, 200 $ 37,800 1 Denominator: Denominator: = Sales dollars required = Sales units required 0
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