Required information Use the following information for the Exercises below. The

Question

Required information Use the following information for the Exercises below. The following information applies to the questions displayed below Hudson Co. reports the contribution margin income statement for 2017 HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (18,300 units at $375 each) Variable costs (10,300 units at $300 each) Contribution nargirn $3,862, 5e0 3,999,809 $772,580 Fixed costs Pretax income $ 172,500 Exercise 18-17 Target income and margin of safety (in dollars) LO C2 1. Assume Hudson Co has a target pretax income of $169,000 for 2018. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2018, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1 Amount of sales 2 Margin of safety

Explanation / Answer

1 CM ratio = 772500/3862500= 20% Amount of sales = (600000+169000)/20%= $3845000 2 Break even sales = 600000/20%= $300000 Margin of safety sales = 3845000-3000000 = $845000 Margin of safety % = 845000/3845000= 22.0%

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.