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 Contribution margin 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution Margin Ratio Numerator: Contribution margin per unit $ 1,425,000 1,339,500 Total fixed costs 1 85,500 27,600 $ 57,900 Denominator: /Selling price per unit Break-even point in dollar sales with new machine: Numerator: Denominator: 1 Contribution margin ratio Per unit = = Contribution Margin Ratio Contribution margin ratio 0 Break-Even Point in Dollars Break-even point in dollars 0
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 Contribution margin 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Note: Round your answers to 2 decimal places. Contribution Margin Ratio Numerator: Contribution margin per unit $ 1,425,000 1,339,500 Total fixed costs 1 85,500 27,600 $ 57,900 Denominator: /Selling price per unit Break-even point in dollar sales with new machine: Numerator: Denominator: 1 Contribution margin ratio Per unit = = Contribution Margin Ratio Contribution margin ratio 0 Break-Even Point in Dollars Break-even point in dollars 0
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6EB: Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit...
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