Question

CHICLAY WORK Required information (The following information applies to the questions displayed below] U 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 1,728,000 each) Contribution margin 432,000 Fixed costs 324,000 Protax income 108,000 1. Assume Hudson Co. has a target pretax income of $162,000 for 2020. What amount of sales in dollars) is needed to produce this target income? 2. if Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales 2. Margin of safety

Answer 1

computation of amount of sales and as needed to produce this target ancome Required contribution = Total fixed costs & Target retax income. & $324000 + $ 162000 = $ 486000 Let x be the number of sales an units. then contribution shall be $225x- $180 x = 286000 O $45x = $ 486000 x = 10800 units 1 Sales an $ = 10800 cenits X $225 = $ 24,30,000

2 computation of margin of sakter Break coon point an consits - Total fixed cast contribution/unit Contribution per unit a selling price - Variable con - $225 - $180 = $45 7200 Onts Break even point is can conits) $ 324000 845 margin of safety & Sales - Break evensales x 100 1 In percentage Sales des =10800 - 7200 XIoo 10800 5 330 3010 Limargin of safety an percentage = 33.3.10