Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 18-25 (Algo) Computing and analyzing operating leverage LO A2 Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement
Exercise 18-25 (Algo) Computing and analyzing operating leverage LO A2
Hudson Company reports the following contribution margin income statement.
HUDSON COMPANY | |
Contribution Margin Income Statement | |
For Year Ended December 31 | |
Sales (9,000 units at $280 each) | $ 2,520,000 |
---|---|
Variable costs (9,000 units at $210 each) | 1,890,000 |
Contribution margin | $ 630,000 |
Fixed costs | 504,000 |
Income | $ 126,000 |
1. Compute the companys degree of operating leverage. 2. If sales decrease by 5% in the next year, what will be the companys income? 3. Prepare a contribution margin income statement for the next year assuming sales decrease by 5%.
Complete this question by entering your answers in the tabs below. Compute the company's degree of operating leverage. (Round your answer to 1 decimal place.) Complete this question by entering your answers in the tabs below. If sales decrease by 5% in the next year, what will be the company's income? Complete this question by entering your answers in the tabs below. Prepare a contribution margin income statement for the next year assuming sales decrease by 5%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started