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 (10,100 units at $300 each) Variable costs (10,100 units at $240 each) Contribution margin Fixed costs Pretax income $3,030,000 2,424,000 $ 606,000 468,000 $ 138,000 Exercise 18-18 Evaluating strategies LO C2 Assume the company is considering investing in a new machine that will increase its fixed costs by $43,000 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 $ 3,030,000 Variable costs 2,343,200 Contribution margin 686,800 Fixed costs 511,000 Income (pretax) $ 175,800 Should the company purchase the machine? Yes If the company raises its selling price to $320 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. $ 80 per unit 2. Contribution margin Contribution margin ratio Break-even point Break-even sales dollars 3. units 4. The marketing manager believes that increasing advertising costs by $101,000 in 2018 will increase the company's sales volume to 11,500 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 Variable costs Contribution margin Fixed costs Income (pretax) Should the company incur the additional advertising costs