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 311
Sales ($50 per unit)
Variable costs ($40 per unit)
Contribution margin
Fixed costs
Income
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,
Sales level required in dollars
Numerator:
Fixed costs plus target income
Sales level required in units
$ 1,000,000
800,000
200,000
175,000
$ 25,000
Numerator:
Denominator:
Contribution margin ratio
Denominator:
Sales dollars required
0
Sales units required
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb76579ad-faff-4bf7-92eb-956a324b8de5%2Fb92af3fb-0802-4ac8-9230-c1b37452c284%2Feq0drx7_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 311
Sales ($50 per unit)
Variable costs ($40 per unit)
Contribution margin
Fixed costs
Income
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,
Sales level required in dollars
Numerator:
Fixed costs plus target income
Sales level required in units
$ 1,000,000
800,000
200,000
175,000
$ 25,000
Numerator:
Denominator:
Contribution margin ratio
Denominator:
Sales dollars required
0
Sales units required
0
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