Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 27,500 units of its only product and reported income of $67,000 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 $144,000. 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 ($45 per unit) Contribution margin Fixed costs Income $ 1,375,000 1,237,500 137,500 70,500 $ 67,000
Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2 [The following information applies to the questions displayed below.] Astro Company sold 27,500 units of its only product and reported income of $67,000 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 $144,000. 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 ($45 per unit) Contribution margin Fixed costs Income $ 1,375,000 1,237,500 137,500 70,500 $ 67,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Contribution Margin per unit
Contribution Margin Ratio
Numerator:
Break-even point in dollar sales with new machine:
Numerator:
1
Proposed
Denominator:
Denominator:
2
TO
Contribution Margin Ratio
Contribution margin ratio
Break-Even Point in Dollars
Break-even point in dollars
(Round your answers to 2 dec
![Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2
[The following information applies to the questions displayed below.]
Astro Company sold 27,500 units of its only product and reported income of $67,000 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 $144,000. 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 ($45 per unit)
Contribution margin
Fixed costs
Income
Problem 18-3A (Algo) Part 1
$ 1,375,000
1,237,500
137,500
70,500
$ 67,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F02131654-7fde-44a5-81bb-ce71c06b36ce%2F20c14bf6-d424-42c2-b881-d7a4cb5d251e%2Fa3srzqm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 18-3A (Algo) Break-even analysis; income targeting and strategy LO C2, A1, P2
[The following information applies to the questions displayed below.]
Astro Company sold 27,500 units of its only product and reported income of $67,000 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 $144,000. 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 ($45 per unit)
Contribution margin
Fixed costs
Income
Problem 18-3A (Algo) Part 1
$ 1,375,000
1,237,500
137,500
70,500
$ 67,000
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