Assume the company is considering investing in a new machine that will increase its fixed costs by $45,500 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.

Assume the company is considering investing in a new machine that will increase its fixed costs by $45,500 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.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 9EA: The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express...

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Required information [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 (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 480,000 Fixed costs Pretax income 156,000 1. Assume Hudson Co. has a target pretax income of $172,000 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.) 1. Amount of sales 2. Margin of safety
Required information [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 (9,600 units at $225 each) Variable costs (9,600 units at $180 each) Contribution margin Fixed costs $2,160,000 1,728,000 432,000 324,000 Pretax income $ 108,000 If the company raises its selling price to $240 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio. 3. Compute Hudson Co.'s break-even point in units. 4. Compute Hudson Co's break-even point in sales dollars. X Answer is complete but not entirely correct. 1. Contribution margin 2$ 60 per unit 2. Contribution margin ratio % 25 3. Break-even point 7,200 X units 4. Break-even sales dollars $ 1,620,000 x < Prev 13 14 of 1 ост 20
Required information [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 (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 480,000 Fixed costs Pretax income 156,000 The marketing manager believes that increasing advertising costs by $110,000 in 2020 will increase the company's sales volume to 12,000 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?
Required information [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 (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 Fixed costs 480,000 Pretax income $ 156,000 If the company raises its selling price to $320 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 per unit 2. Contribution margin ratio 3. Break-even point units 4. Break-even sales dollars
Required information [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 (10,400 units at $280 each) $ 2,912,000 Variable costs (10,400 units at $210 each) 2,184,000 Contribution margin 728,000 Fixed costs 567,000 Pretax income $ 161,000 Assume the company is considering investing in a new machine that will increase its fixed costs by $44,500 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases this machine
Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,400 units at $280 each) Variable costs (10,400 units at $210 each) Contribution margin $2,912,000 2,184,000 728,000 567,000 $ 161,000 Fixed costS Pretax income 1. Assume Hudson Co. has a target pretax income of $170,000 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.)
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 Assume the company is considering investing in a new machinethat will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 per unit.Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases thismachine.
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.
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 1. Assume Hudson Co. has a target pretax income of $162,000 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 to one decimal place.)
Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,400 units at $280 each) Variable costs (10,400 units at $210 each) Contribution margin $2,912,000 2,184,000 728,000 567,000 $ 161,000 Fixed costs Pretax income If the company raises its selling price to $300 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 per unit 2. Contribution margin ratio 3. Break-even point units 4. Break-even 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 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. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,600 units at $225 each) $ 2,160,000 Variable costs (9,600 units at $180 each) 1,728,000 Contribution margin $ 432,000 Fixed costs 324,000 Pretax income $ 108,000 1. 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.