Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement. For Year Ended December 31 Sales (10,000 units at $225 each) Variable costs (10,000 units at $180 each) Contribution margin Fixed costs Income $ 2,250,000 1,800,000 $ 450,000 360,000 $ 90,000 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%.
Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement. For Year Ended December 31 Sales (10,000 units at $225 each) Variable costs (10,000 units at $180 each) Contribution margin Fixed costs Income $ 2,250,000 1,800,000 $ 450,000 360,000 $ 90,000 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%.
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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