Required Information The Following Information Applies To The Questions Displayed Below Astro Company Sold 26 000 Uni 1 (50.18 KiB) Viewed 10 times
Required information [The following information applies to the questions displayed below.] Astro Company sold 26,000 units of its only product and reported income of $114,100 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 $147,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($42 per unit) Variable costs ($35 per unit) Contribution margin Fixed costs Income $ 1,092,000 910,000 182,000 67,900 $ 114,100 3. Compute the sales level required in both dollars and units to earn $170,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage)
3. Compute the sales level required in both dollars and units to earn $170,000 of target income for next year with the machine installed. (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: Fixed costs plus target income S Sales level required in units Numerator: > Answer is complete but not entirely correct. 621,900 X Fixed costs plus target income ✓ $ 621,900 X 1 1 / Denominator: Contribution margin ratio 50.00% Denominator: Contribution margin per unit ✔ 21.00✓ S = Sales dollars required $1,243,800 Sales units required 29,615 units
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