Question

Required information Problem 18-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1 The following information applies to the questions displayed below. Astro Co. sold 19,300 units of its only product and incurred a $54.940 loss ignoring taxes) for the current year as shown here. During a planning session for year 2020'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 $143,000. The maximum output capacity of the company is 40.000 units per year ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 Sales $ 719, 249 Variable costs 532, 680 Contribution margin 177,560 Fixed costs 232,500 Net loss $(54,948)

Answer 1

Answer Contributija Maria per unite Combibybjon per unit is the variable profit eained by the organisation during the period. It is profil per unit. before fixed costs. It is calculated by __ contbytog_ - Sales per unit - Variable Costa - Per Unit a per unit. Goulbution moren folyo __ Entribution Mongig atio is the the percentage of Conwibytion earned hom the sale of the product. It shows how many percentage of revenye the company earns the Conlibutiong margin. It is calculated by Centally 499_Mesgig_lefto : Contribution X 100 Sales Revenue 3 Bregu - Even point in dollar syles bregh even point is the point where the compilys profit or Oet income him operq4oos is 29491 to zerp. It mans that point where the company covers Its cost is een profit. It is the sale point to which company will have to malee to equal profile with the costs. It is qlcylgled by Breal -- Even point - Fixed costo in Dollar Sales contributing mingin katjo

in the question we have given that will install a new machine which reluRT the vewighle costs by 40 % byt inweasing the fixed costs by $ 143000. There is I no change to selling price. There love the Income statement I of Astro 6. for December 31 2000 is t o