Return to question Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,000 units at $280 each) Variable costs (9,000 units at $210 each) Contribution margin Fixed costs Pretax income $2,520,000 1,890,000 $ 630,000 420,000 $ 210,000 1. Compute the company's degree of operating leverage for 2019. 2. If sales decrease by 6% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 6%. Prepare a contribution margin income statement for 2020. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the company's degree of operating leverage for 2019. (Round your answer to 1 decimal place.) Degree of operating leverage 5.0 Required 1 Required 2 > Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,000 units at $280 each) Variable costs (9,000 units at $210 each) Contribution margin Fixed costs Pretax income $2,520,000 1,890,000 $ 630,000 420,000 $ 210,000 1. Compute the company's degree of operating leverage for 2019. 2. If sales decrease by 6% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 6%. Prepare a contribution margin income statement for 2020. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If sales decrease by 6% in 2020, what will be the company's pretax income? Pretax income $ 94.500 Required 1 Required 3 > Exercise 18-25 Degree of operating leverage LO A2 Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,000 units at $280 each) Variable costs (9,000 units at $210 each) Contribution margin Fixed costs Pretax income $2,520,000 1,890,000 $ 630,000 420,000 $ 210,000 1. Compute the company's degree of operating leverage for 2019. 2. If sales decrease by 6% in 2020, what will be the company's pretax income? 3. Assume sales for 2020 decrease by 6%. Prepare a contribution margin income statement for 2020. * Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required i Required 2 Required 3 Assume sales for 2020 decrease by 6%. Prepare a contribution margin income statement for 2020. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales 2,394,000 > Variable costs 1,795,500 Contribution margin 598,500 Fixed costs 504,000 Income (pretax) 94,500
