Answer:
Find below complete question:
Hudson Co. reports the contribution margin income statement for 2017. Assume sales remain constant at 10.000 units.
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2017
Sales (10,000 units at $244 each) $2,440,000
Variable costs (10,000 units at $195 each) $1,950,000
Contribution margin $490,000
Fixed costs $327,600
Pretax Income $162,400
Assume the company is considering investing in a new machine that will increase its fixed costs by $36,000 per year and decrease its variable costs by $10 per unit.
Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine
The new pretax income is $226,400 compared to 2018 $162,400,which implies that investing in the new machine is viable
Step-by-step explanation:
The forecast contribution margin income statement for 2018 is prepared below with fixed costs of $36,000 added to the previous cost of $327,600 while variable cost per unit drops by $10 to $185 per unit
Hudson Co,forecast contribution margin income statement for 2018
Sales (10,000*$244) $2,440,000
variable cost(10,000*$185) ($1,850,000)
Contribution margin $590,000
fixed costs( $327,600+$36,000) ($ 363,600)
Pretax income $ 226,400