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
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
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6EA: Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of...
Related questions
Question
![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
$ 1,000,000
800,000
200,000
175,000
$ 25,000
1
$
Break-Even Point in Dollar Sales with New Machine:
Numerator:
Proposed
Denominator:
Denominator:
0
=
E
Contribution Margin Ratio
Contribution margin ratio
Break-Even Point in Dollars
Break-even point in dollars
0
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bc58846-50f0-4e5d-a312-f249853bfd80%2F4175d861-c523-4d7e-838d-844692354ea2%2F3ikk6y_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
$ 1,000,000
800,000
200,000
175,000
$ 25,000
1
$
Break-Even Point in Dollar Sales with New Machine:
Numerator:
Proposed
Denominator:
Denominator:
0
=
E
Contribution Margin Ratio
Contribution margin ratio
Break-Even Point in Dollars
Break-even point in dollars
0
0
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