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Problem 21-3A Break-even analysis; income targeting and strategy C2 A1 P2 Astro Co: sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. Con Margin t For Your Ended December 31 Salin 60 per un Varble cos 40 per Contribution margin Food c $1,000,000 200,000 175.000 Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000 3. Compute the sales level required in both dollars and units to earn $208, 000 of target income for next year with the machine installed Check (2) Income, $104,000

Problem 21-3A Break-even analysis; income targeting and strategy C2 A1 P2 Astro Co: sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. Con Margin t For Your Ended December 31 Salin 60 per un Varble cos 40 per Contribution margin Food c $1,000,000 200,000 175.000 Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000 3. Compute the sales level required in both dollars and units to earn $208, 000 of target income for next year with the machine installed Check (2) Income, $104,000

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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9:02 AM Tue Feb 20 Problem 21-3A Break-even analysis; income targeting and strategy C2 A1 P2 Coburgimtament For Your Ended December 31 Astro Co. sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. Sale $50 Variable con 40 per unit) Contribution margin Food c $1,000,000 0000 QA.. 200,000 175.000 25.000 ... Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000 3. Compute the sales level required in both dollars and units to earn $208, 000 of target income for next year with the machine installed Check (2) Income, $104,000 Problem 21-4A
Transcribed Image Text:9:02 AM Tue Feb 20 Problem 21-3A Break-even analysis; income targeting and strategy C2 A1 P2 Coburgimtament For Your Ended December 31 Astro Co. sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $241,000. The selling price per unit will not change. Sale $50 Variable con 40 per unit) Contribution margin Food c $1,000,000 0000 QA.. 200,000 175.000 25.000 ... Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000 3. Compute the sales level required in both dollars and units to earn $208, 000 of target income for next year with the machine installed Check (2) Income, $104,000 Problem 21-4A
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