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) $ 2,160,000 Variable costs (9,600 units at $180 each) 1,728,000 Contribution margin $ 432,000 Fixed costs 324,000 Income $ 108,000 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 (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 Income $ 108,000 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%.

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Description: Hudson Company reports the following contribution margin income statement. HUDSON COMPANYContribution Margin Income StatementFor Year Ended December 31Sales (9,600 units at $225 each)$ 2,160,000Variable costs (9,600 units at $180 each)1,728,000Contri

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 14EB: Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are...

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HUDSON COMPANY
Contribution Margin Income Statement
For Year Ended December 31
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
Income	$ 108,000

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