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 $241,000. The selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,000,000 Variable costs ($40 per unit) 800,000 Contribution margin 200,000 Fixed costs 175,000 Income $ 25,000 Problem 5-3A (Static) Part 1 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. Contribution Margin Per Unit Proposed Contribution margin C Fixed costs Denominator: = Contribution Margin Ratio Contribution margin ratio s Pretax income 1 Sales Break Machine: Numerator: Denominator Break-Even Point in Dollars TE Break-even point in dollars Fixed costs Pretax income Sales Variable costs Mach eak Numerator