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

1. Compute Hudson Co.'s break-even point in units.
2. Compute Hudson Co.'s break-even point in sales dollars.

1. | Break-even point |...................| units
2. Break-even point |.....................| units

Homework Answers

Answer #1

Break-even point in units is computed as:

1.Break-even point(in units)=Fixed costs/Contribution margin per unit

Contribution margin per unit=Selling price per unit-Variabl cost per unit

Contribution margin per unit=$300-$240

Contribution margin per unit=$60
Break-even point(in units)=480,000/60

Break-even point(in units)=8,000 units

2.Break-even sales(in dollars)=Break-even point in units*Selling price per unit

Break-even sales(in dollars)=8,000*300

Break-even sales(in dollars)=$2,400,000

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