Required information [The following information applies to the questions display

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Required information [The following information applies to the questions displayed below] Astro Co. sold 19,500 units of its only product and incurred a $45,700 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 $145,000. 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 $ 721,500 577,200 144,388 190,000 $ (45,780) 3. Prepare a forecasted contribution margin income statement for 2018 that shows the expected results with the machine 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 intermediate calculations. 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

ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Sales $721,500 Variable costs ($577,200 x 50%) $288,600 Contribution Margin $432,900 Fixed Costs ($190,000 + $145,000) $335,000 Net Income $97,900

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