Please fill out double check please please thank you much appreciated!!!! Hudson

Question

Please fill out double check please please thank you much appreciated!!!!

Hudson Co. reports the contribution margin income statement for 2015. Assume sales remain constant at 8.600 units. 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 2016 assuming the company purchases this machine. Should the company purchase the machine? Yes No

Explanation / Answer

new variable cost per unit = 275 - 8 = 267

Total fixed cost = 315000 + 35500 = 350500

yes ,Machine shall be purchased as income is increased

contribution margin statement sales    (8600 * 324 ) 2786400 less:Variable cost (8600 * 267 ) - 2296200 contribution margin 490200 less:Fixed cost - 350500 Net operating income 139700

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