[The following information applies to the questions displayed below/ Astro Co so

Question

[The following information applies to the questions displayed below/ Astro Co sold 20,900 units of its only product and incurred a $71860 loss (Iignoring taxes) for the current year as shown here. During a planning session for year 2016's activties, the production manager notes that variable costs can be reduced 40% by Installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $159.000. The maximum output capacity of the company Is 40.000 units per year ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015 Sales Varlable costs $802.560 601.920 Contribution margin Fixed costs 200,640 272.500 Net loss s (71860)

Explanation / Answer

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Working:

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Present Contribution margin per unit 9.60

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