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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0fb60e58-50e4-4518-a381-3d6ab62533ef%2F3db265e5-82e7-4efd-a5cb-0c3e6ccd7d51%2Fr1ws8uh_processed.jpeg&w=3840&q=75)
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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