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 lts annual fixed costs by $140,000. The maxlmum 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 5 5. Prepare a forecasted contribution margin Income statement that shows the results at the sales level computed In part 4. Assume no income taxes will be due. (Dnot round intermediate calculations. Round "per unit answers" to 2 decimal places.) ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 $ Per Unit S 40.00 Contribution margin

Explanation / Answer

Contrbution Margin=44%

Sales=(Fixed Cost +Net Inome)*100/Contrbution Margin

=520000*100/44%=1181818.20

Variable Cost ==1181818.20*44%

Astro Contribution Margin Income Statement Forcasted Contrbution Margin Income Statement For Year Ended Deceber 31 2018 Sales                     11,81,818.18 variable cost                       6,61,818.18 contrbution Margin 520000 Fixed Cost 420000 Net Income 100000

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