Hudson Company reports the following contribution margin income statement.HUDSON COMPANYContribution Margin Income StatementFor Year Ended December 31Sales (11,100 units at $375 each)Variable costs (11,100 units at $300 each).Contribution marginFixed costsIncome$ 4,162,5003,330,000832,500660,000$ 172,500The company is considering buying a new machine that will increase its fixed costs by $38,000 per year and decrease its variablcosts by $9 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases thismachine.SalesHUDSON COMPANYContribution Margin Income StatementVariable costsFor Year Ended December 31Contribution marginFixed costsIncome0$0

Income statement is a financial statement that shows profitability, total revenue and total…

Answered: Hudson Company reports the following…

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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Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 70 49 $ 21 Fixed expenses are $74,000 per month and the company is selling 4,400 units per month. Req 2A 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used? Req 2B Percent of Sales Complete this question by entering your answers in the tabs below. 100% 70 30% by Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. Net operating income
Concord Corporation recorded operating data for its auto accessories division for the year. Sales Contribution margin Total direct fixed costs Average total operating assets $750000 12.0% 38.0% 56.0% 32.0% 250000 90000 500000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30000, assuming fixed costs are held constant?
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Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.
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A company wants to expand by offering a new product. Expected cost and revenue data for this product are: Annual sales 5,000 units Unit selling price ? Unit variable costs: Production $ 30.20 Selling 6. Incremental fixed costs per year: 32:16 Production $35,000 Selling $45,000 If the company adds this new product, sales of its other product lines will be impacted, causing the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge for its new product without affecting the company's total profits? Multiple Choice $39.90 $52.20
Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit. The unit cost for Frank Co. to make the part is $30, which includes $4 of fixed costs. If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? a. $40,000 decrease b. $50,000 increase c. $20,000 increase d. $30,000 increase

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