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Required information Problem 18-4A Break-even analysis; income targeting and forecasting LO C2, P2, A1 The following information applies to the questions displayed below.] Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as showrn 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 ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2017 Sales Variable costs Contribution margin Fixed costs Net loss S1,000,000 800,000 200,000 250,000 $ (50,000) Problem 18-4A Part 3 3. Prepare a forecasted contribution margin income statement for 2018 that shows the expected results with the machine installed Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due Answer is complete but not entirely correct. ASTRO COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Sales Variable costs Contribution margin Fixed costs Net income S 100,000 800,000 (700,000) 250,000 S (950,000)

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