Question

Required information Use the following information for the Exercises below. Skip to question [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 (10,300 units at $375 each) $ 3,862,500 Variable costs (10,300 units at $300 each) 3,090,000 Contribution margin 772,500 Fixed costs 600,000 Pretax income $ 172,500 Exercise 18-16 Break-even LO P2 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-ev

Answer 1

See

Step-by-step explanation:

1. Break even point in units

= Fixed cost / Selling price per unit - Variable cost per unit

Given that

Fixed cost = $600,000

Selling price per unit = $375

Variable cost per unit = $300

Break even point in units = $600,000 / ($375 - $300)

= $600,000 / $75

= 8,000 units

2. Break even in sales

= Fixed cost / Selling price unit - Variable cost per unit × Selling price per unit.

=[ $600,000 / ($375 - $300) ] × $375

= 8,000 × $375

= $3,000,000