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Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring...

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Accounting

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Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2018's 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 $200.000. The maximum output capacity of the company is 40,000 units per year COMPANY Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Net loss 51,eee,eee 800,000 200,8e0 25e,00e s (50,eee) 4. Compute the sales level required inboth dollars and unts to earn $2 installed and no change in unit sales price. sales ievel requred in both dollars and units to eam $200,000 of target pretax income in 2018 with the machine

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