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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 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. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Sales Variable costs Contribution margin Contribution Margin Ratio Numerator: Contribution margin per unit $ Total fixed costs $ 1,000,000 800,000 200,000 175,000 $ 25,000 $ Proposed Denominator: I Selling price per unit S Break-Even Point in Dollar Sales with New Machine: Numerator: I Denominator: 1 Contribution margin ratio 50 Per unit Per unit 50 Per unit 50 = = Contribution Margin Ratio Contribution margin ratio Break-Even Point in Dollars Break-even point in dollars 0% 0
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 2. Prepare a contribution margin income
statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000. ASTRO
COMPANY Contribution Margin Income
Statement For Year Ended December 31 Contribution margin $ 1,000,000 800,000 200,000 175,000 $ 25,000 $ 0 0