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Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO. Contribution Margin
Required information
[The following information applies to the questions displayed below.]
Hudson Co. reports the contribution margin income statement for 2017.
| HUDSON CO. | |||
| Contribution Margin Income Statement | |||
| For Year Ended December 31, 2017 | |||
| Sales (11,600 units at $225 each) | $ | 2,610,000 | |
| Variable costs (11,600 units at $180 each) | 2,088,000 | ||
| Contribution margin | $ | 522,000 | |
| Fixed costs | 315,000 | ||
| Pretax income | $ | 207,000 | |
Assume the company is considering investing in a new machine that will increase its fixed costs by $35,500 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.
| HUDSON CO. | |
| Forecasted Contribution Margin Income Statement | |
| For Year Ended December 31, 2018 | |
| Sales | |
| Variable costs | |
| Contribution margin | 0 |
| Fixed costs | |
| Income (pretax) | $0 |
| Should the company purchase the machine? | |
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