Required information [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Income HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 2,452,500 1,962,000 The company is considering buying a new machine that will increase its fixed costs by $39,000 per year and decrease its variable costs by $10 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases this machine. Sales Variable costs Contribution margin Fixed costs Income/Loss 490,500 387,000 $ 103,500

Required information [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (10,900 units at $225 each) Variable costs (10,900 units at $180 each) Contribution margin Fixed costs Income HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 2,452,500 1,962,000 The company is considering buying a new machine that will increase its fixed costs by $39,000 per year and decrease its variable costs by $10 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases this machine. Sales Variable costs Contribution margin Fixed costs Income/Loss 490,500 387,000 $ 103,500

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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Sunn Company manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company's annual fixed costs are $562,500. (1) Prepare a contribution margin income statement at the break-even point. (2) If the company's fixed costs increase by $135,000, what amount of sales (in dollars) is needed to break even? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a contribution margin income statement at the break-even point. SUNN COMPANY Contribution Margin Income Statement (at Break-Even) Sales Variable costs Contribution margin Fixed costs Income Amount $ 180 135 45 562,500 -562455
Required information [The following information applies to the questions displayed below] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 10,000 5,500 4,500 2,250 Net operating income 2,250 12. What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage
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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
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): $ 15,000 9,000 6,000 3,120 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,880 6. If the selling price increases by $2 per unit and the sales volume decreales by 100 units, what would be the net operating income? $ 3,000 Net operating income
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Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 86,000 34,400 51,600 39,560 $ 12,040 Required: 1. What is the company's degree of operating leverage? Required 1 Percent of Sales 100% 40% 60% 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.)
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