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Helen [10]
2 years ago
12

Astro Co. sold 20,600 units of its only product and incurred a $55,028 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 $156,000. 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 $ 784,860 Variable costs 627,888 Contribution margin 156,972 Fixed costs 212,000 Net loss $ (55,028 ) 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.

Business
1 answer:
Alex2 years ago
6 0

Answer:

Explanation:

Contribution : Contribution tells the availability of funds.  It is computed by taking a difference  of sales and variable cost.

The equation to compute net income is shown below:

Sales - Variable cost = Contribution ;

Contribution - Fixed expense = Net income

For computing the foretasted contribution for 2018, the following information is need to be considered which is shown below.  

1. As for variable cost, 50% should be recognized i.e 627,888 × 50% = $313,944

2. The fixed cost is increased by $156,000. So the revised fixed cost = 212,000 + $156,000 = $368,000

3. Other things remain same.

The calculation attachment is given below:

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"What type of research design should a marketing researcher use to find out how many customers there are, what brands they buy a
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7 0
3 years ago
Doyle Company issued $226,000 of 10-year, 5 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is
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Answer:

Dr cash                $226,000

Cr Bonds payable                    $226,000

31st December year 1

Dr cash                       $74,000

Cr Lease revenue                     $74,000

Dr interest expense               $11,300

Cr Cash                                                $11,300

31st December year 2

Dr cash                       $74,000

Cr Lease revenue                     $74,000

Dr interest expense               $11,300

Cr Cash                                                $11,300

Explanation:

Upon the receipt of $226,000 from bond issue,cash acount would be debited with $226,000 and bonds payable account would be credited with the same amount.

When land purchased,the land account is debited with $226,000 and cash is credited with $226,000.

The receipt of $74,000 from lease rental means that cash is debited and the lease revenue is credited.

The coupon interest on the bonds=$226,000*5%=$11,300

The coupon interest is debited to interest expense and credited to cash in each of the two years.

find attached t accounts.

Download xlsx
7 0
3 years ago
A firm earns a normal profit when its: Multiple Choice accounting profit is positive. economic profit is positive. economic prof
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Answer:

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The accounting profits include only explicit costs incurred in the production process. It is the difference between total revenue earned and explicit cost.  

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