Question

Required information 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 (9,600 units at $225 each) $ 2,160,000 Variable costs (9,600 units at $180 each) 1,728,000 Contribution margin 432,000 Fixed costs 324,000 Pretax income $ 108,000 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Fixed costs= $324,000

Unitary variable cost= $180

Selling price= $225

To calculate the break-even point in units and dollars, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 324,000 / (225 - 180)

Break-even point in units= 7,200

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 324,000 / (45/225)

Break-even point (dollars)= $1,620,000