(Answered) Exercise - target income and margin of safety hudson co

Accounting

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)?

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