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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 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.

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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! 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
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
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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