Refer to the information in Exercise. In Exercise HUDSON CO. Contribution Margin Income Statement For Year Ended
Question:
Refer to the information in Exercise.
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
1. Assume Hudson Co. has a target pretax income of $162,000 for 2016. What amount of sales (in dollars) is needed to produce this target income?
2. If Hudson achieves its target pretax income for 2016, what is its margin of safety (in percent)? (Round to one decimal place.)
Contribution MarginContribution 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...
Step by Step Answer:
Fundamental Accounting Principles
ISBN: 978-0077862275
22nd edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta