Question: Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (9,600 units
Hudson Co. reports the contribution margin income statement for 2019.
| HUDSON CO. | |||
| Contribution Margin Income Statement | |||
| For Year Ended December 31, 2019 | |||
| 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. Compute the companys degree of operating leverage for 2019. 2. If sales decrease by 5% in 2020, what will be the companys pretax income? 3. Assume sales for 2020 decrease by 5%. Prepare a contribution margin income statement for 2020.
Required 1
Compute the companys degree of operating leverage for 2019.
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Required 2
If sales decrease by 5% in 2020, what will be the companys pretax income?
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Required 3
Assume sales for 2020 decrease by 5%. Prepare a contribution margin income statement for 2020.
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