Help Save & E Che Contribution Margin Income Statement Sales (11,100 units at $3

Question

Help Save & E Che Contribution Margin Income Statement Sales (11,100 units at $375 each) Variable costs (11,100 units at $300 each) Contribution margin Fixed cost Pretax income $4.162,500 3,330,000 $ 832,500 660,000 $ 172,500 Assume the company is considering investing in a new machine that will increase its fixed costs by $38.000 per year and decrease its variable costs by $9 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine. HUDSON CO. ted Contribution Margin Income Statement For Year Ended r 31, 2018 the Prey, 78 9 of 10

Explanation / Answer

if company purchased new machine, company can earn an additional profit of USD 61,900 ($234,400-$172,500)

HUDSON CO. Forecasted Contribution Margin Income Statement For year ended December 31, 2018 Sales $ 4,162,500 Variable costs (11,100*($300-$9) $ 3,230,100 Contribution margin $     932,400 Fixed costs ($660,000+$38,000) $     698,000 Income (pretax) $     234,400 Should the company purchase the machine? Yes

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