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(Assessment Problem) Problem 18-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1

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Astro Co. sold 19,100 units of its only product and incurred a $63,282 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018s 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 $141,000. 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		$	699,060
Variable costs			489,342
Contribution margin			209,718
Fixed costs			273,000
Net loss		$	(63,282	)

Problem 18-4A Part 1

Required:

1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.)

Problem 18-4A Part 1 Required: 1. Compute the break-even point in dollar sales for year 2017. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Contribution Margin Per Unit Current 36.60 Per unit Sales 12.81 Per unit Variable costs Per unit Contribution margin $ 23.79 Contribution Margin Ratio Choose Contribution Margin Ratio Choose Numerator: Denominator: Sales per unit Contribution margin per unit Contribution margin ratio 36.60 10.98 30.00% Break-Even Point in Dollar Sales: Choose Break-Even Point in Choose Numerator: Dollars Denominator: Contribution margin Break-even point in dollars Total fixed costs ratio $910,000 273,000 30.00%