Required information The following information applies to th

Required information 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 (11,600 units at $225 each) Variable costs (11,600 units at $180 each) Contribution margin Fixed costs Pretax income $2,610,000 2,088,000 S 522,000 315,000 $ 207,000 Assume the company is considering investing in a new machine that will increase its fixed costs by $35,500 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine HUDSON co. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2018 Sales Variable costs Contribution margin Fixed costs Income (pretax) Should the company purchase the machine?

Solution

Answer

hudson co. forecasted contribution margin income statement

for year ended dec 31 , 2018

Sales	$2,610,000
Variable costs	$1,995,200
Contribution margin	$614,800
Fixed cost	$350,500
Income (pretax)	$264,300
Should the company purchase the machine	yes