Refer to the information in Exercise 21-11.

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%.

Data From Exercise 21-11

Hudson Co. reports the following contribution margin income statement. Compute 

(1) Break-even point in units and 

(2) Break-even point in sales dollars.

Transcribed Image Text:

Contributlon Margin Income Statement For Year Ended December 31 Sales (9,600 units at $225 each).... Variable costs (9,600 units at $180 each)...... $2,160,000 1,728,000 Contribution margin .. 432,000 Fixed costs 324,000 Income.. $ 108,000