### Contribution Margin Income Statement Analysis**Astro Company Financial Overview:**Astro Co. sold 20,800 units of its only product and incurred a $56,672 loss (ignoring taxes) for the current year. The company plans for the year 2020 to reduce variable costs by 50% by installing a machine that automates operations. This installation will increase fixed costs by $158,000. The maximum output capacity is 40,000 units per year.**Income Statement (For Year Ended December 31, 2019):**- **Sales:** $796,640- **Variable Costs:** $637,312- **Contribution Margin:** $159,328- **Fixed Costs:** $216,000- **Net Loss:** $(56,672)### Predicted Break-even Analysis for 2020Calculate the break-even point in dollar sales assuming the new machine is installed and no change in unit selling price occurs. Round your answers to two decimal places.#### Tables for Calculation:1. **Contribution Margin per Unit:** - Proposed cell to fill with values.2. **Contribution Margin Ratio:** - Choose numerator and denominator to calculate the ratio.3. **Break-even Point Analysis:** - Calculate using proposed values. - Proposed cell for break-even point in dollars.The tables help configure how changes in fixed and variable costs affect the break-even point, crucial for informed decision-making and planning in Astro Co.'s operations.

Break even point (BEP) refers to that volume of operation where, there is no profit or loss to an…

[The tollowing Astro Co. sold 20,800 units of its only product and incurred a $56,672 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $158,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 $796,640 637,312 159,328 • 216,000 Sales Variable costs Contribution margin Fixed costs Net loss $(56,672)

[The tollowing Astro Co. sold 20,800 units of its only product and incurred a $56,672 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $158,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 $796,640 637,312 159,328 • 216,000 Sales Variable costs Contribution margin Fixed costs Net loss $(56,672)

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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