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Jetson Co. sold 20,400 units of its only product and incurred a $53,368 loss (ignoring taxes) for the current year as shown here. During a planning...


Jetson Co. sold 20,400 units of its only product and incurred a $53,368 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012’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 $154,000. The maximum output capacity of the company is 40,000 units per year.

JETSON COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2011
Sales $ 773,160
Variable costs 618,528


Contribution margin 154,632
Fixed costs 208,000


Net loss $ (53,368 )

Jetson Co. sold 20,400 units of its only product and incurred a $53,368 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012’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 $154,000. The maximum output capacity of the company is 40,000 units per year. JETSON COMPANY Contribution Margin Income Statement For Year Ended December 31, 2011 Sales $773,160 Variabl e costs 618,528 Contri bution margin 154,632 Fixed costs 208,000 Net loss $ (53,368)
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8406706.xls

JETSON CO.
Sales
VC
Contribution Margin
Fixed Cost
Net Loss
Solution 1 Breakeven in $ Sales Amt in $
Price per unit % of Sales
$773,160
38
100%
$618,528
30
80%
$154,632
8
20%
$208,000
$(53,368)...

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