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What amount of sales is needed to produce this target income

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Exercise - Target income and margin of safety

Hudson Co. reports the contribution margin income statement for 2017.

HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017

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

342,000

Pretax income

$103,500

1. Assume Hudson Co. has a target pretax income of $165.000 for 2018. What amount of sales (in dollars) is needed to produce this target income?

2. If Hudson achieves its target pretax income for 2018, what is its margin of safety (in percent)?

Reference no: EM131698014

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