I need help with these problems please Help Save&Exit; Subm Check my work The fo
ID: 2569132 • Letter: I
Question
I need help with these problems please Help Save&Exit; Subm Check my work 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 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 Part 5 of S Contribution Margin Income statenent 10 points Sales variable co ts Contribution margin Pixed costs Net loss $1,000,000 800,000 200,000 250,000 (50,000) eBook Print 5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in pairt 4. Assume no income taxes will be due. (Round your intermediate calculation and final answer to the nearest whole dollar) References Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 S Per Units 50 Contribution margin Prexor 6Next 3074 jp9
Explanation / Answer
Solution 5. Forecasted Contribution Margin Income statement
Working Note 1 : Calculation per unit
Working Notes 2 : New Variable cost per unit
Working Note 3 : Calculation of Forecasted Data of Astro Company
Variable cost forecasted (New Variable cost per unit * units produced = 20000*$20)
Assuming Whole production is sold since there is no inventory hence production = sales
Forecasted statement
Astro company
Forecasted contribution margin income starement
For the year ended December 31, 2018
Contribution margin = $30/$50 *100 = 60%
Brief Note = Astro company has capacity of producing the 40000 units. This is only'Maximum Capacity' However company is currently producing 20000 units and data will be as per 20000 units.
Solution 4
sales level requires in dollars
Formulae = (Fixed cost + Target pretax Income) / contribution ratio
Numerator
(Fixed cost + Pretax Income required)
$650000
($450000 + $200000)
$1083333
($650000/60%)
sales level required in units
Formulae = (Fixed cost + Target pretax Income) / contribution per unit
Numerator
(Fixed cost + pretax income)
Denominator
(contribution per unit)
$650000
($450000 + $200000)
21667 units
($650000/30)
Particulars Data per unit Sales (Sales value /units = $1000000/20000) $50 Variable cost (Variable cost/units = $800000/20000) $40 Contribution (Sales price unit - Variable cost per unit) $10