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 Problem 18-3A (Static) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Contribution Margin Ratio Numerator: $ 1,000,000 800,000 200,000 175,000 $ 25,000 1 1 $ Break-Even Point in Dollar Sales with New Machine: Numerator: 1 1 Proposed Denominator: Denominator: 0 = Contribution Margin Ratio Contribution margin ratio Break-Even Point in Dollars Break-even point in dollars 0 0

For the past year, Cline Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs except that a new wage contract will increase variable costs by $6 per unit. a.  Determine the break-even sales (in units) for the past year.fill in the blank 1 units b.  Determine the break-even sales (in units) for the coming year.fill in the blank 2 units

Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows:     Thalassines Kataskeves, S.A.Income Statement—Bilge PumpFor the Quarter Ended March 31 Sales   $ 470,000 Variable expenses:     Variable manufacturing expenses $ 124,000   Sales commissions 41,000   Shipping 19,000   Total variable expenses   184,000 Contribution margin   286,000 Fixed expenses:     Advertising (for the bilge pump product line) 23,000   Depreciation of equipment (no resale value) 118,000   General factory overhead 40,000*   Salary of product-line manager 125,000   Insurance on inventories 10,000   Purchasing department 44,000†   Total fixed expenses   360,000 Net operating loss   $ (74,000) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the…

Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 47,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Amount $ 1,250, 200 958, 800 $ 291,400 220,900 $ 70,500 Per Unit $ 26,60 20.40 $6.20 4.70 $ 1.50 Fixed costs included in this income statement are $305,500 for depreciation on plant and machinery and miscellaneous factory operations and $95,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20.20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production…