Problem 5-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1

[The following information applies to the questions displayed below.]

Astro Co. sold 20,100 units of its only product and incurred a $63,560 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 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $151,000. 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		$	755,760
Variable costs			566,820
Contribution margin			188,940
Fixed costs			252,500
Net loss		$	(63,560	)

	Contribution Margin Per Unit		Current
Contribution Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
Break-Even Point in Dollar Sales:
	Choose Numerator:	/	Choose Denominator:	=	Break-Even Point in Dollars
		/		=	Break-even point in dollars