Question

Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,500 units at $225 each) Variable costs (10,500 units at $180 each) Contribution margin Fixed costs $2,362,500 1,890,000 472,500 369,000 $ 103,500 Pretax income 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. units 1. Break-even point 2. Break-even point

Answer 1

Answer to Question 1
Particular's	Working	Amt. $
Sales	10500 Units * $ 225 per units	$   2,362,500
Less : Veriable Manufacturing Cost	10500 Units * $ 180 per units	$   1,890,000
Contribution Margin		$      472,500
Less : Fixed cost		$      369,000
Net Profit/Operating Income		$      103,500
For Current :
Contribution Margin Ratio	= Contribution Margin/Sales *100
	= $ 4,72,500/$2,362,500 * 100
	= 20
Breakeben sales (dollar)	= Fixed cost / contribution margin ratio
	= $ 3,69,000/20*100
	= $1,845,000
Brekeven sales( units )	= Fixed cost / contribution margin per unit
	= $3,69,000/45 per units
	= 8200 units
Answer to Question 2 : Increase it's Fixed cost by $45000 & Decrease Variable cost per units by $9 per units
Particular's	Working	Amt. $
Sales	10500 Units * $ 225 per units	$   2,362,500
Less : Veriable Manufacturing Cost	10500 Units * ($180-$9) per units	$   1,795,500
Contribution Margin		$      567,000
Less : Fixed cost	$369000+$ 45000	$      414,000
Net Profit/Operating Income		$      153,000
Answer to Question 3 If Company selling price to $240 per units
Particular's	Working	Amt. $
Sales	10500 Units * $ 240 per units	$   2,520,000
Less : Veriable Manufacturing Cost	10500 Units * $ 180 per units	$   1,890,000
Contribution Margin		$      630,000
Less : Fixed cost		$      369,000
Net Profit/Operating Income		$      261,000
Contribution Margin per units	= $240 - $180
	= $60
Contribution Margin Ratio	= Contribution Margin/Sales *100
	= $ 6,30,000/$2,520,000 * 100
	= 25
Breakeben sales (dollar)	= Fixed cost / contribution margin ratio
	= $ 3,69,000/25*100
	= $1,476,000
Brekeven sales( units )	= Fixed cost / contribution margin per unit
	= $3,69,000/60 per units
	= 6150 units
Answer to Question 4 : Increasing advertisement cost $90000 & Sales volume increase to 11900
Particular's	Working	Amt. $
Sales	11900 Units * $ 240 per units	$   2,856,000
Less : Veriable Manufacturing Cost	11900 Units * $ 180 per units	$   2,142,000
Contribution Margin		$      714,000
Less : Fixed cost	$369000+$ 90000	$      459,000
Net Profit/Operating Income		$      255,000
Note: Advertisement cost consider in fixed cost.