Everything is correct. Please help with #44. The following information applies t

Question

Everything is correct. Please help with #44.

The following information applies to the questions displayed below.] Astro Co. sold 19,000 units of its only product and incurred a $27,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016'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 $310,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015 Sales Variable costs $1,330,000 931,000 Contribution margin Fixed costs 399,000 426,000 Net loss $ (27,000)

Explanation / Answer

Answer to Question no.44

Particulars Value Fixed Cost               426,000 Machine cost               310,000 Total Fixed Cost (a)               736,000 Selling price per unit (b)                  70.00 Variable cost per Unit ©                  29.40 Contribution per unit (d)=(b)-©                  40.60 Contribution margin ratio (e)=(d)/(b) 58% Desired Profit (f)               130,000 Total Fixed Cost+ Desired Profit (g)               866,000 Sales in Dollar (h)=(g)/(€)            1,493,103 Sales in Unit(I)=(h)/(b)                21,330

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