Exercise 21-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2017. HUDSON Co Contribution Margin Income Statement For Year Ended December 31, 2017 $2,362,500 1,890,000 472,500 315,000 Sales (10,500 units at $225 each) Variable costs (10,500 units at $180 each) Contribution margin S Fixed costs S 157,500 Pretax income 1. Compute the company's degree of operating leverage for 2017 2. If sales decrease by 4% in 2018, what will be the company's pretax income? 3. Assume sales for 2018 decrease by 4%. Prepare a contribution margin income statement for 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If sales decrease by 4% in 2018, what will be the company's pretax income? Pretax income Required 1 Required 3 1. Compute the company's degree of operating leverage for 2017. 2. If sales decrease by 4% in 2018, what will be the company's pretax income? 3. Assume sales for 2018 decrease by 4%. Prepare a contribution margin income statement for 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 2 Assume sales for 2018 decrease by 4%. Prepare a contribution marqin income statement for 2018 HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Sales Variable costs Contribution margin Fixed costs Income (pretax) 0 0 KRequired 2 Required 3