! Required information Use the following information for the Exercises below. [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 (9,600 units at $225 each) Variable costs (9,600 units at $180 each) Contribution margin Fixed costs Pretax income $2,160,000 1,728,000 $ 432,000 324,000 $ 108,000 Exercise 5-16 Break-even LO P2 1. Compute Hudson Co.'s break-even point in units and. 2. Compute Hudson Co.'s break-even point in sales dollars. units 1. Break-even point Break-even point 2. Exercise 5-17 Target income and margin of safety (in dollars) LO C2 1. Assume Hudson Co. has a target pretax income of $162,000 for 2018. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2018, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales Margin of safety % 2 Exercise 5-18 Evaluating strategies LO C2 Assume the company is considering investing in a new machine that will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 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 Fixed costs $ Income (pretax) Should the company purchase the machine? 0 0 Exercise 5-20 Evaluating strategies LO C2 The marketing manager believes that increasing advertising costs by $81,000 in 2018 will increase the company's sales volume to 11,000 units. Prepare a forecasted contribution margin income statement for 2018 assuming the company incurs the additional advertising costs HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Sales 0 Variable costs Contribution margin Fixed costs Income (pretax) Should the company incur the additional advertising costs? $ 0 Exercise 5-19 Evaluating strategies LO C2 If the company raises its selling price to $240 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio. 3. Compute Hudson Co.'s break-even point in units. 4. Compute Hudson Co.'s break-even point in sales dollars. 1. per unit % 2. Contribution margin Contribution margin ratio Break-even point Break-even sales dollars units 3. 4