Hudson Co. reports the contribution margin income statement for 2019.HUDSON CO.Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (11,000 units at $300 each)Variable costs (11,000 units at $240 each)Contribution margin$3,300, өөө2,640,0002$660,000360,000Fixed costsPretax income$300,0001. Compute the company's degree of operating leverage for 2019.2. If sales decrease by 5% in 2020, what will be the company's pretax income?3. Assume sales for 2020 decrease by 5%. Prepare a contribution margin income statement for 2020.Complete this question by entering your answers in the tabs below.

Degree of operating leverage = Contribution margin/Pretax income

Answered: e contribution margin income statement

Business

Accounting

e contribution margin income statement

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5PB: Wellington, Inc., reports the following contribution margin income statement for the month of May....

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Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 If the company raises its selling price to $240 per unit, computeits (1) contribution margin per unit, (2) contribution margin ratio, (3) break-even point in units, and(4) break-even point in sales dollars.
Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 The marketing manager believes that increasing advertising costs by $81,000 in 2020 will increase the company’s sales volume to 11,000 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional advertising costs.