Question

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

1. The break even point in units is 7,200

2, The breakeven point in Dollars is $ 1,620,000

Step-by-step explanation:

Computation of break even point in units

It is calculated by dividing the fixed costs with the contribution margin in $.

Fixed costs $ 324,000

Sales Value per unit $ 225

Variable Costs per unit $ 180

Contribution margin per unit $ 45

Break

even point in units = Fixed Costs / Contribution margin per unit

Break even Point in Units = $ 324,000/ $ 45 = 7,200 units

Computation of break even point in dollars

It is calculated by dividing the fixed costs with the contribution margin %

Sales Value $ 2,160,000

Variable costs $ 1,728,000

Contribution margin $ 432,000

Contribution margin as a % of sales 20 %

Calculation of break even point in Dollars=Fixed costs/Contribution margin %

$ 432,000/ 20 % = $ 1,620,000