Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (11,400 units at $225 each) Variable costs (11,400 units at $180 each) Contribution margin Fixed costs Pretax income $2,565,000 2,052,000 513,000 360,000 153,000 The marketing manager believes that increasing advertising costs by $124,000 in 2020 will increase the company's sales volume to 2,800 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional dvertising costs.
Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (11,400 units at $225 each) Variable costs (11,400 units at $180 each) Contribution margin Fixed costs Pretax income $2,565,000 2,052,000 513,000 360,000 153,000 The marketing manager believes that increasing advertising costs by $124,000 in 2020 will increase the company's sales volume to 2,800 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional dvertising costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Hudson Co. reports the contribution margin income statement for 2019.
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2019
Sales (11,400 units at $225 each)
Variable costs (11,400 units at $180 each)
Contribution margin
Fixed costs
Pretax income
The marketing manager believes that increasing advertising costs by $124,000 in 2020 will increase the company's sales volume to
12,800 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional
advertising costs.
HUDSON CO.
Forecasted Contribution Margin Income Statement
For Year Ended December 31, 2020
Sales
Variable costs
Contribution margin
Fixed costs
Income (pretax)/Loss
Should the company incur the additional advertising costs?
$2,565,000
2,052,000
513,000
360,000
$ 153,000
$
0
0
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