TS Required information The foWowing information applies to the questions displa

Question

TS Required information The foWowing information applies to the questions displayed below) Part 2 of5 sold 19,200 units of its only product and incurred a $43072 loss ignoring taxes) for the current year as shown here. During a planning session for year 2018's activities, the production maneger notes that varlable 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 $142000. The maximum output capacity of the company is 40000 units per year 10 ASTRO COMPANY Contribution Nargis Ineone Statemeat For .ar Ended December 31. 2017 salese costs Conteibution margin Net loss 563 712 104-000 2. Compute the predicted break-even point in doitar 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

Explanation / Answer

Proposed Variable cost 281856 Proposed contribution margin 422784 Contribution margin per unit Proposed Contribution margin/ No. of units Contribution margin/ No. of units 140928/19200 422784/19200 7.34 22.02 Contribution margin ratio Choose Numerator / Choose Denominator ,= Contribution margin ratio Contribution margin / Sales Contribution margin ratio 422784 / 704640 0.6 60 % Break even point in sales dolllars Choose Numerator / Choose Denominator Break even point in sales dollars (184000+142000) / 0.6 543333.33

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