HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2015

Question

HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2015 Sales (9,900 units at $225 each) $ 2,227,500 Variable costs (9,900 units at $180 each) 1,782,000 Contribution margin $ 445,500 Fixed costs 326,700 Pretax income $ 118,800 The marketing manager believes that increasing advertising costs by $84,000 in 2016 will increase the company’s sales volume to 11,300 units. Prepare a forecasted contribution margin income statement for 2016 assuming the company incurs the additional advertising costs.

Explanation / Answer

Forecasted contribution margin income statement for 2016     

Sales (11300 * 225)

(-) Variable cost (11300 * 180)

2542500

2034000

Contribution

(-) Fixed costs

(-) Additional advertising costs

508500

326700

84000

Sales (11300 * 225)

(-) Variable cost (11300 * 180)

2542500

2034000

Contribution

(-) Fixed costs

(-) Additional advertising costs

508500

326700

84000

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