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 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 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 2020 assuming the company purchases this machine.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Selling price= $225

Unitary variable cost= 180 - 9= $171

Fixed costs= 324,000 + 40,500= $364,500

Units sold= 9,600

We need to make the new contribution margin income statement:

Sales= 9,600*225= 2,160,000

Total variable cost= (9,600*171)= (1,641,600)

Total contribution margin= 968,400

Fixed costs= (364,500)

Net income= 603,900