I'm having a hard time with my accounting homework, I appreciate any help.
this is what my homework says
Astro Co. sold 20,750 units of its only product and incurred a $62,500 loss (ignoring taxes) for the current year 2008. During a planning session for year 2009ís 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 $220,000. The maximum output capacity of the company is 41,500 units per year.
then I'm asked a serie of question, I've answered most of them, except these two
Compute the sales level required in both dollars and units to earn $126,350 of after-tax income in 2009 with the machine installed and no change in unit sales price. Assume that the income tax rate is 30%.
I'm told to use these equations
dollar sales at target after tax income = fixed costs +pretax income all this divided by contribution margin ratio
and to calculate unit sales at target after tax income= fixed costs + pretax income all this divided by contribution margin per unit.
I was able to figure out the contribution margin, it equals 180500, fixed costs are 490000 and pretax income is 180500, but I don't know nothing about contribution margin ratio nor contribution margin per unit since I haven't been able to figure out how many units should be sold in order to make $126,350
thank you for any help.