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Required information Problem 5-3A (Static) Break-even analysis; income targeting and strategy LO C2, A1, P2 The following information applies to the questions displayed below.) Astro Company sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year's activities, 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 $241000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Incone Statement For Year Ended December 31 Sales (50 per unit) $ 1,000,000 Variable costs ($40 per unit) 300,000 Contribution margin 200,000 Fixed costs 175.000 Income $ 25.000 Problem 5-3A (Static) Part 2 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000 ASTRO COMPANY Contribution Margin income Statement For Year Ended December 31 Variable costs ($40 per unit) Contribution margin Fixed costs Income 800,000 200,000 175,000 $ 25,000 Problem 5-3A (Static) Part 2 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed Assume sales are $1,000,000 ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Contribution margin $ fixed costs by $241,000. The selling price per unit will not change ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (558 per unit) $ 1,000,000 Variable costs (540 per unit) 800,000 Contribution margin 200,000 Fixed costs 175.000 Incone $ 25,000 Problem 5-3A (Static) Part 3 3. Compute the sales level required in both dollars and units to earn $208,000 of target income for next year with the machine installed Sales level required in dollars Numerator Denominator Sales dollars required Sales level required in units Numeraton Denominator Sunt required

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