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 Sales level required in dollars Numerator: 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 units Numerator: 1 $ 1,000,000 1 800,000 200,000 175,000 $ 25,000 Denominator: Denominator: Sales dollars required + Sales units required
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 Sales level required in dollars Numerator: 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 units Numerator: 1 $ 1,000,000 1 800,000 200,000 175,000 $ 25,000 Denominator: Denominator: Sales dollars required + Sales units required
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
F2
Sales ($50 per unit)
Variable costs ($40 per unit)
Contribution margin
W
Fixed costs
Income
installed.
3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine
Sales level required in dollars
Numerator:
Sales level required in units
Numerator:
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$ 1,000,000
800,000
200,000
175,000
$ 25,000
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Denominator:
Denominator:
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Sales units required
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ment
!
Required information
[The following information applies
to
the questions displayed
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
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.
below.]
$ 1,000,000
800,000
200,000
175,000
$ 25,000
Saved](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8ec1a3c-ef25-41e0-a640-297aa0ac5121%2Fa1272e61-0f28-4c22-9744-233c8db6b6db%2Fi9qhr2k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fbb.johnstoncc.
ment
!
Required information
[The following information applies
to
the questions displayed
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
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.
below.]
$ 1,000,000
800,000
200,000
175,000
$ 25,000
Saved
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