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Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin $1,425,000 1,339,500 85,500 27,600 Income $ 57,900 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Fixed costs ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales Variable costs Contribution margin Fixed costs Income Sales level required in dollars 0 3. Compute the sales level required in both dollars and units to earn $120,000 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 units $0 Numerator: / Denominator: = 1 = Numerator: / Denominator: = 1 = Sales dollars required 0 Sales units required 0

Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin $1,425,000 1,339,500 85,500 27,600 Income $ 57,900 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Fixed costs ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales Variable costs Contribution margin Fixed costs Income Sales level required in dollars 0 3. Compute the sales level required in both dollars and units to earn $120,000 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 units $0 Numerator: / Denominator: = 1 = Numerator: / Denominator: = 1 = Sales dollars required 0 Sales units required 0

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EA: Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of...
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Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income ASTRO COMPANY 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Variable costs Contribution Margin Income Statement For Year Ended December 31 Sales Contribution margin Fixed costs Income $ 1,425,000 1,339,500 85,500 27,600 $ 57,900 Sales level required in dollars Sales level required in units 0 3. Compute the sales level required in both dollars and units to earn $120,000 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) $0 Numerator: Denominator: = 1 = Sales dollars required Numerator: / Denominator: = 1 = 0 Sales units required 0
Transcribed Image Text:Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year'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 $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($47 per unit) Contribution margin Fixed costs Income ASTRO COMPANY 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Variable costs Contribution Margin Income Statement For Year Ended December 31 Sales Contribution margin Fixed costs Income $ 1,425,000 1,339,500 85,500 27,600 $ 57,900 Sales level required in dollars Sales level required in units 0 3. Compute the sales level required in both dollars and units to earn $120,000 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) $0 Numerator: Denominator: = 1 = Sales dollars required Numerator: / Denominator: = 1 = 0 Sales units required 0
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