Required information The following information applies to the questions displaye

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Required information The following information applies to the questions displayed below.] Astro Co. sold 20,400 units of its only product and incurred a $53,368 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 $154,000. 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 Variable costs Contribution margin 154,632 Fixed costs Net loss $773,160 618,528 208,000 $ (53,368) Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.) Contribution Margirn Per Unit Current Contribution Margin Ratio Choose Denominator: Contribution Margin Ratio Contribution margin ratio Choose Numerator: I Break-Even Point in Dollar Sales: Choose Denominator: Break-Even Point in Dollars Break-even point in dollars Choose Numerator:I

Explanation / Answer

IN 2017

1.CONTRIBUTION MARGIN PER UNIT

CONTIBUTION MARGIN/PRODUCTON UNIT Ie. $154632/20400= $7.58 PER UNIT

2.CONTRIBUTION MARGIN RATIO = SALES-VARIABLE COST/SALES*100

=CONTRIBUTION /SALES*100= 154632*100/773160 = 20%

3. B.E.P = FIXED COST/ CONTRBUTION MARGIN RATIO

=$ 208000/20%= $1040000

B.E.P. UNITS= $ B.E.P./$ SALE UNIT PRICE

=$ 1040000/ $ 37.9 =27440.63 UNITS

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