Austin, Inc., produces small-scale replicas of vintage automobiles for collectors and museums Finished products are built on a 1/20 scale of originals. The firm's income statement showed the following Revenues (1,520 units)$828,000 Variable expenses Contribution margin Fixed expenses Operating income 471,900 $356,100 $14,900 $41,200 An automated stamping machine has been developed that can efficiently produce body frames, hoods, and doors to the desired scale. If the machine is leased, fixed expenses will increase by $33,100 per year. The firm's production capacity will increase, which is expected to result in a 16% increase in sales volume. It is also estimated that labor costs of $27 per unit could be saved because less polishing and finishing time will be required. Required: a. Calculate the firm's current contribution margin ratio and break-even point in terms of revenues. (Round your intermediate calculations to nearest whole number.) b. Calculate the firm's contribution margin ratio and break-even point in terms of revenues of the new machine is leased. (Round your intermediate calculations to nearest whole number.) c. Calculate the firm's operating income assuming that the new machine is leased

Austin, Inc., produces small-scale replicas of vintage automobiles for collectors and museums Finished products are built on a 1/20 scale of originals. The firm's income statement showed the following Revenues (1,520 units)$828,000 Variable expenses Contribution margin Fixed expenses Operating income 471,900 $356,100 $14,900 $41,200 An automated stamping machine has been developed that can efficiently produce body frames, hoods, and doors to the desired scale. If the machine is leased, fixed expenses will increase by $33,100 per year. The firm's production capacity will increase, which is expected to result in a 16% increase in sales volume. It is also estimated that labor costs of $27 per unit could be saved because less polishing and finishing time will be required. Required: a. Calculate the firm's current contribution margin ratio and break-even point in terms of revenues. (Round your intermediate calculations to nearest whole number.) b. Calculate the firm's contribution margin ratio and break-even point in terms of revenues of the new machine is leased. (Round your intermediate calculations to nearest whole number.) c. Calculate the firm's operating income assuming that the new machine is leased

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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