Question

# Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution...

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 (10,600 units at \$300 each) \$ 3,180,000 Variable costs (10,600 units at \$240 each) 2,544,000 Contribution margin 636,000 Fixed costs 480,000 Pretax income \$ 156,000

If the company raises its selling price to \$320 per unit.

1.
Compute Hudson Co.'s contribution margin per unit.
2. Compute Hudson Co.'s contribution margin ratio.
3. Compute Hudson Co.'s break-even point in units.
4. Compute Hudson Co.'s break-even point in sales dollars.

If the company raises its selling price to \$320 per unit :-

1) Contribution margin per unit = Selling price - Variable cost = \$320 - \$240 = \$80

2) Contribution margin ratio = Contribution margin per unit / Selling price = \$80 / \$320 = 25%

3) Breakeven point (In Units) =Total Fixed cost / Contribution margin per unit = \$480,000 / \$80 = 6,000 Units

4) Breakeven point (In Dollars) = Total Fixed cost / Contribution margin ratio = \$480,000 / 25% = \$1,920,000

Thank you,
Have a nice day,

Kiran G.

#### Earn Coins

Coins can be redeemed for fabulous gifts.