Question

Required information The following information applies to the questions displayed below.) Astro Co. sold 20,000 units of its only product and incurred a $50,000 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 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $200,000. 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 $1,000,000 Variable costs 800,000 Contribution margin 200, eee Fixed costs 250,000 Net loss $ (50,000)

Answer 1

Required: 2 Contribution margin per unit Sales Variable cost Contribution margin Proposed 50.00 20.00 30.00 - Contribution margin per unit 30.00 Contribution margin Ratio Sales per unit 50.00 Contribution margin Ratio 60.00% Total Fixed cost 450000 Break even point in Dollar sales Contribution margin ratio 60% Break even point in Dollar sales 750000