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 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Pretax income $2,452,500 1,962,000 490,500 387,000 S 103,500 Exercise 18-16 Break-even LO P2 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. 1. Break-even point Break-even point 8,600 units $ 1,935,000 2. 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 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Pretax income $2,452,500 1,962,000 490,500 387,000 103,500 Exercise 18-17 Target income and margin of safety (in dollars) LO C2 1. Assume Hudson Co. has a target pretax income of $159,000 for 2020. What amount of sales in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) $ 2,729,940 1. Amount of sales 2. Margin of safety % Exercise 18-18 Evaluating strategies LO C2 Assume the company is considering investing in a new machine that will increase its fixed costs by $39,000 per year and decrease its variable costs by $10 per unit. Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases this machine. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Fixed costs Income (pretax)/Loss Should the company purchase the machine? Exercise 18-19 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. Contribution margin Contribution margin ratio Break-even point per unit % 2. 3. units 4. Break-even sales dollars Exercise 18-20 Evaluating strategies LO C2 The marketing manager believes that increasing advertising costs by $78,000 in 2020 will increase the company's sales volume to 12,300 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional advertising costs. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Fixed costs Income (pretax)/Loss Should the company incur the additional advertising costs
