Astro Co. sold 19,000 units of Its only product and Incurred a $128,000 loss (Ig

Question

Astro Co. sold 19,000 units of Its only product and Incurred a $128,000 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 30% by installing a machine that automates several operations. To obtain these savings, the company must Increase Its annual fixed costs by $140,000. 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 Fixed costs Net loss $ 760,eee 608,eee 152,eee 28,eee $ (128,eee) Problem 18-4A Part 3 3. Prepare a forecasted contribution margin Income statement for 2018 that shows the expected results with the machlne Installed. Assume that the unit selling price and the number of units sold will not change, and no Income taxes will be due. (Do not round Intermedlate calculetlons. Round your answers to the nearest whole dollar.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Contribution margin

Explanation / Answer

Forecasted Contribution margin income statement Sales 760000 Variable costs 425600 =608000*(1-0.3) Contribution margin 334400 Fixed expenses 420000 =280000+140000 Net loss -85600

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