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Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (11,300 units at $175 each) Variable costs (11,389 units at $140 each) Contribution margin Fixed costs Pretax income $1,977,500 1,582,089 395,500 315,000 $ 80,500 Exercise 21-17 Target income and margin of safety (in dollars) LO C2 1. Assume Hudson Co. has a target pretax income of $155.000 for 2020. What amount of sales (in dollar target income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round place.) Amount of sales 2. Margin of safety Exercise 21-18 Evaluating strategies LO C2 Assume the company is considering investing in a new machine that will increase its fixed costs by $37,000 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases this machine. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Fixed costs Income (pretax Loss Should the company purchase the machine? Exercise 21-16 Break-even LO P2 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. units Break-even point Break-even point 2

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