Refer to the information in Exercise 21-16. The marketing manager believes that increasing advertising costs by $81,000

Question:

Refer to the information in Exercise 21-16. The marketing manager believes that increasing advertising costs by $81,000 in 2018 will increase the company's sales volume to 11,000 units. Prepare a forecasted income statement for 2018 assuming the company incurs the additional advertising costs.
HUDSON CO.
Income Statement
For Year Ended December 31, 2017
Sales (9,600 units at $225 each).................................$2,160,000
Variable costs (9,600 units at $180 each) .......................1,728,000
..................................................432,000
Fixed costs............................................................324,000
Pretax income......................................................$ 108,000
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...