Question

Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017 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 Exercise 21-16 Break-even LO P2 1. Compute Hudson Co.'s break-even point in units and. 2. Compute Hudson Co.'s break-even point in sales dollars.

Answer 1

Contribution margin per unit = $ 225 - $ 180 = $ 45.

Break even point in units = ( Fixed cost / CM per unit ) = $ 324000 / $ 45 = 7200 Units.

Break even point in sales dollar = 7200 * $ 225 = $ 1620000.