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Hudson Co. reports the contribution margin income statement for 2019.
|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|
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
Have a nice day,
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