# Question

Refer to the information in Exercise. Assume the company is considering investing in a new machine that 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 2016 assuming the company purchases this machine.
In Exercise
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2015
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

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