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 Sales level required in dollars Numerator: $ 1,425,000 1,339,500 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. Note: 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 Numerator: 85,500 27,600 $ 57,900 Denominator: Denominator: = = Sales dollars required = Sales units required
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 Sales level required in dollars Numerator: $ 1,425,000 1,339,500 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. Note: 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 Numerator: 85,500 27,600 $ 57,900 Denominator: Denominator: = = Sales dollars required = Sales units required
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...
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