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 (10,800 units at $375 each) Variable costs (10,800 units at $300 each) Contribution margin Fixed costs Pretax income $4,050,000 3,240,000 $ 810,000 660,000 $ 150,000 1. Compute the company's degree of operating leverage for 2019. 2. If sales decrease by 5% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 5%. 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 Required 1 Required 2 Required 3 If sales decrease by 5% in 2020, what will be the company's pretax income? Pretax income Required 1 Required 2 Required 3 Assume sales for 2020 decrease by 5%. 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 0 Fixed costs Income (pretax) $ 0