Required information [The following information applies to the questions displayed below] Astro Company 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. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income $ 1,000,000 800,000 200,000 175,000 $ 25,000 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.
Required information [The following information applies to the questions displayed below] Astro Company 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. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($40 per unit) Contribution margin Fixed costs Income $ 1,000,000 800,000 200,000 175,000 $ 25,000 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.
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 20,000 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.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($50 per unit)
Variable costs ($40 per unit)
Contribution margin
Fixed costs
Income
$1,000,000
800,000
200,000
175,000
$ 25,000
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fac69951b-8728-46ae-8bfb-4f439eaff53e%2F8e65f959-b42f-4cd1-8149-9f6cbb789d72%2F5set9wj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ces
Required information
[The following information applies to the questions displayed below.]
Astro Company 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.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($50 per unit)
Variable costs ($40 per unit)
Contribution margin
Fixed costs
Income
$1,000,000
800,000
200,000
175,000
$ 25,000
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.
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