Hudson Company reports the following contribution margin income statement.HUDSON COMPANYContribution Margin Income StatementFor Year Ended December 31Sales (9,600 units at $225 each)Variable costs (9,600 units at $18e each)Contribution marginFixed costs$ 2,160,0001,728,000$ 432,000324,000$ 188,000Income1. Compute the company's degree of operating leverage.2. If sales decrease by 5% in the next year, what will be the company's income?3. Prepare a contribution margin income statement for the next year assuming sales decrease by 5%.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Compute the company's degree of operating leverage.Degree of operating leverage< Required 1Required 2 >Required 1Required 2Required 3If sales decrease by 5% in the next year, what will be the company's income?Income< Required 1Required 3 >Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Prepare a contribution margin income statement for the next year assuming sales decrease by 5%.HUDSON COMPANYContribution Margin Income StatementFor Year Ended December 31SalesVarlable costsContribution marginFixed costsIncome< Required 2Required 3>

Solution 1: Degree of operating leverage = Contribution margin / Income Contribution margin =…

Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (9,600 units at $225 each) Variable costs (9,600 units at $18e each) Contribution margin Fixed costs $ 2,160,000 1,728,000 $ 432,000 324,000 $ 108,000 Income 1. Compute the company's degree of operating leverage. 2. If sales decrease by 5% in the next year, what will be the company's income? 3. Prepare a contribution margin income statement for the next year assuming sales decrease by 5%. Complete this question by entering your answers in the tabs below.

Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (9,600 units at $225 each) Variable costs (9,600 units at $18e each) Contribution margin Fixed costs $ 2,160,000 1,728,000 $ 432,000 324,000 $ 108,000 Income 1. Compute the company's degree of operating leverage. 2. If sales decrease by 5% in the next year, what will be the company's income? 3. Prepare a contribution margin income statement for the next year assuming sales decrease by 5%. Complete this question by entering your answers in the tabs below.

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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Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true? a. Sales will increase by 300,000. b. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. e. Common fixed cost will decrease by 27,600.
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