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e contribution margin income statement

e contribution margin income statement

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Hudson Co. Contribution Margin Income Statement for 2019** **Income Statement:** - **Sales** (11,000 units at $300 each): $3,300,000 - **Variable Costs** (11,000 units at $240 each): $2,640,000 - **Contribution Margin**: $660,000 - **Fixed Costs**: $360,000 - **Pretax Income**: $300,000 **Analysis Tasks:** 1. **Compute the company's degree of operating leverage for 2019.** 2. **If sales decrease by 5% in 2020, what will be the company's pretax income?** 3. **Assume sales for 2020 decrease by 5%. Prepare a contribution margin income statement for 2020.** *Complete this question by entering your answers in the tabs below.*
Transcribed Image Text:**Hudson Co. Contribution Margin Income Statement for 2019** **Income Statement:** - **Sales** (11,000 units at $300 each): $3,300,000 - **Variable Costs** (11,000 units at $240 each): $2,640,000 - **Contribution Margin**: $660,000 - **Fixed Costs**: $360,000 - **Pretax Income**: $300,000 **Analysis Tasks:** 1. **Compute the company's degree of operating leverage for 2019.** 2. **If sales decrease by 5% in 2020, what will be the company's pretax income?** 3. **Assume sales for 2020 decrease by 5%. Prepare a contribution margin income statement for 2020.** *Complete this question by entering your answers in the tabs below.*
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