Inbox·?Newt P Americ O gMAV M Inbox ? Ch 17 a Conne Ch 18 My Gr. S https://newco
ID: 2519800 • Letter: I
Question
Inbox·?Newt P Americ O gMAV M Inbox ? Ch 17 a Conne Ch 18 My Gr. S https://newconnect.mheducation.com/flow/connect.html Required information (Assessment Problem) Problem 18-4A Break-even analysis; income targeting and forecesting Lo c2, P2, A1 The following information applies to the questions displayed below) Astro Co sold 19,900 units of its only product and incurred a $49,148 loss (ignoning taxes) for the current year as here. During a planning reduced 50% by installing increase its annual fixed costs by $149,000 The maximum output capacity session for year 2018's activities, the production manager notes that variable costs can be a machine that automates several operations. To obtain these savings, the company must of the company is 40.000 units per year ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, sales Variable costs Contribution margin Fixed costs Net loss 2017 $744,268 595,408 148,852 198,000 5(49,148) Problem 18-4A Part 1 Required: 1. Compute the break even point in dollar sales ror year 2017·(Round your answers to 2 decimal place Margin Per k Prev 910113f 13Next ?? ere to searchExplanation / Answer
Solution 1:
Sales for 2017 = $744,260
Contribution margin = $148,852
Contribution margin ratio = $148,852 / $744,260 = 20%
Fixed cost for 2017 = $198,000
Breakeven point in dollar sales for 2017 = Fixed cost / contribution margin ratio
= $198,000/20% = $990,000
Solution 2:
Expected sales for 2018 = $744,260
Variable cost for 2018 = $744,260 * 50% = $372,130
Contribution for 2018 = $744,260 - $372,130 = $372,130
Contribution margin ratio = $372,130 / $744,260 = 50%
Fixed cost for 2018 = $198,000 + $149,000 = $347,000
Break-even point in dollar sales for 2018 = $347,000 / 50% = $694,000
Solution 3:
Solution 4:
Target net operating income = $190,000
Target contribution = $190,000 + $347,000 = $537,000
Contribution margin ratio = 50%
Required sales to achieve target net operating income = Target contribution / Contribution margin ratio
= $537,000 / 50% = $1,074,000
Selling price per unit = $744,260 / 19900 = $37.40
Required sales units to achieve target income = $1,074,000 / $37.40 = 28717 units
Note: I have answered sufficent parts as per chegg policy, kindly post separte question for remaining parts.
Astro Company Forecasted Contribution margin income statement For the year ended December 31, 2018 Particulars Amount Sales $744,260.00 Variable Cost $372,130.00 Contribution margin $372,130.00 Fixed cost $347,000.00 Net Income $25,130.00