Hudson Co. reports the contribution margin income statement for 2015. Assume sal

Question

Hudson Co. reports the contribution margin income statement for 2015. Assume sales and variable costs per unit remain constant.

     

   

The marketing manager believes that increasing advertising costs by $78,000 in 2016 will increase the company’s sales volume to 10,700 units. Prepare a forecasted contribution margin income statement for 2016 assuming the company incurs the additional advertising costs.

Hudson Co. reports the contribution margin income statement for 2015. Assume sales and variable costs per unit remain constant.

Explanation / Answer

Prepare the forecasted contribution margin income statement for 2016.

Conclusion:

The pretax income is reduced from the previous year. The marketing managers adivise is not advisable to follow.

Particulars Calculation Amount($) Sales (10700*225) 2407500 Less: Variable cost (10700*180) 1926000 Contribution margin 481500 Less: Fixed Cost 78000+321300 399300 Pretax income 82200

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

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