Required information [The following information applies to the questions displayed below] Astro Company sold 20,500 units of its only product and reported income of $77,400 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 49% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $151,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($51 per unit) Variable costs ($42 per unit) Contribution margin Fixed costs Income $1,045,500 861,000 184,500 107,100 $ 77,400 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places.
Required information [The following information applies to the questions displayed below] Astro Company sold 20,500 units of its only product and reported income of $77,400 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 49% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $151,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($51 per unit) Variable costs ($42 per unit) Contribution margin Fixed costs Income $1,045,500 861,000 184,500 107,100 $ 77,400 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
[The following information applies to the questions displayed below]
Astro Company sold 20,500 units of its only product and reported income of $77,400 for the current year. During a
planning session for next year's activities, the production manager notes that variable costs can be reduced 49% by
installing a machine that automates several operations. To obtain these savings, the company must increase its annual
fixed costs by $151,000. Total units sold and the selling price per unit will not change,
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December
Sales ($51 per unit)
Variable costs ($42 per unit)
Contribution margin
Pixed costa
Income
1. Compute the break-even point in dollar sales for next year assuming the machine is installed.
Note: Round your answers to 2 decimal places.
Contribution margin
Contribution Margin Ratio
31
$ 1,045,500
861,000
184,500
107,100
5 77,400
Numerator:
Denominator:
Break-even point in dollar sales with new machine:
Numerator:
Denominator:
Per unit
=
Contribution Margin Ratio
Contribution margin ratio
Break-Even Point in Dollars
Break-even point in
dollars](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18172341-1844-47d5-991d-98dd00d1ba57%2F6643a74a-cc86-4021-9fd2-b5df5b70c98d%2Fm9rjbkn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below]
Astro Company sold 20,500 units of its only product and reported income of $77,400 for the current year. During a
planning session for next year's activities, the production manager notes that variable costs can be reduced 49% by
installing a machine that automates several operations. To obtain these savings, the company must increase its annual
fixed costs by $151,000. Total units sold and the selling price per unit will not change,
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December
Sales ($51 per unit)
Variable costs ($42 per unit)
Contribution margin
Pixed costa
Income
1. Compute the break-even point in dollar sales for next year assuming the machine is installed.
Note: Round your answers to 2 decimal places.
Contribution margin
Contribution Margin Ratio
31
$ 1,045,500
861,000
184,500
107,100
5 77,400
Numerator:
Denominator:
Break-even point in dollar sales with new machine:
Numerator:
Denominator:
Per unit
=
Contribution Margin Ratio
Contribution margin ratio
Break-Even Point in Dollars
Break-even point in
dollars
![2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume
sales are $1,045,500.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Contribution margin
3. Compute the sales level required in both dollars and units to earn $210,000 of target income for next year with the machine
installed.
Note: 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:
Denominator:
Denominator:
Sales dollars required
Sales units required](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18172341-1844-47d5-991d-98dd00d1ba57%2F6643a74a-cc86-4021-9fd2-b5df5b70c98d%2Fbofu88k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume
sales are $1,045,500.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Contribution margin
3. Compute the sales level required in both dollars and units to earn $210,000 of target income for next year with the machine
installed.
Note: 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:
Denominator:
Denominator:
Sales dollars required
Sales units required
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