Question

Any help with this 4 part question would be appreciated. Thanks so much in advance.

Astro Co. sold 20,800 units of its only product and incurred a $56,672 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018’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 $158,000. The maximum output capacity of the company is 40,000 units per year.

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2017

Sales	$796,640
Variable costs	637,312
Contribution margin	159,328
Fixed costs	216,000
Net loss	$(56,672)

1) Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.)

2) Compute the predicted break-even point in dollar sales for year 2018 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.)
3)Prepare a forecasted contribution margin income statement for 2018 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

4)Compute the sales level required in both dollars and units to earn $280,000 of target pretax income in 2018 with the machine installed and no change in unit sales price. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage)

Answer 1

Ans: © Break even in dollar, sales o fixed Costs Conveibution Margin Ratio $216,000 s 9$ 1080000] contebestion quergin ratio o conpebution Martins y los - Sales $ 7.66x100 38.3 @ Predicted Break even point o fixed Cost Contubation morgin Ratio 8- $216000 + $ 158,000) . 60% $1$623,333 38.3 Conderbution margin Ratio g 28.98 (38-3- 15.32) $ 160% ] Selling Price (+796,640/2fogon) $38.3 Variable cost per cmit (639,312 X 50 %) 26800 3-415-32 Contribution margin & $38.3 - $15.32 Contribution may ? #22.98)

- ASTRO COMPANY Horcasted Contribution Margin Income Statement Sales I variable Costs (20goox $15:32) Contribution margin 4796,640 $318,656 $477,984 fixed Costs ( $0916,000 +$ 158,000) C Net Income $374,000 $103,984 4 Required sales in dollar a fixed cost + Tareget fetax Income . Contribution margin creatio 8 (816,000+4158,000) +9280,000 - 60% 0 4 109,000 Required sales in Chitso (116,000 + $158,000) + 4280,000 $24.98 528,460] (rounded)
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