Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,500 units at $225 each) $2,362,500 Variable costs (10,500 units at $180 each) 1,890,000 Contribution margin $ 472,500 Fixed costs 315,000 Pretax income $ 157,500 1. Compute the company's degree of operating leverage for 2019 2. If sales decrease by 4% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 4%. Prepare a contribution margin income statement for 2020. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the company's degree of operating leverage for 2019. (Round your answer to 1 decimal place Degree of operating leverage Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. Hudson co reports the con puoson co. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,500 units at $225 each) $2,362,500 Variable costs (10,500 units at $180 each) 1,890,000 Contribution margin $ 472,500 Fixed costs 315,000 Pretax income $ 157,500 1. Compute the company's degree of operating leverage for 2019, 2. If sales decrease by 4% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 4%. Prepare a contribution margin income statement for 2020. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If sales decrease by 4% in 2020, what will be the company's pretax income? Pretax income Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,500 units at $225 each) $2,362,500 Variable costs (10,500 units at $180 each) 1,890,000 Contribution margin- $ 472,500 Fixed costs 315,000 Pretax income $ 157,500 1. Compute the company's degree of operating leverage for 2019. 2. If sales decrease by 4% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 4%. Prepare a contribution margin income statement for 2020. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume sales for 2020 decrease by 4%. Prepare a contribution margin income statement for 2020. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Ficed costs Income (pretax)
