Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 58,000 units of each product. Sales and costs for each product follow.     Product T   Product O Sales   $ 974,400       $ 974,400   Variable costs     779,520         194,880   Contribution margin     194,880         779,520   Fixed costs     46,880         631,520   Income before taxes     148,000         148,000   Income taxes (32% rate)     47,360         47,360   Net income   $ 100,640       $ 100,640       2. Assume that the company expects sales of each product to decline to 41,000 units next year with no change in unit selling price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as just shown with columns for each of the two products (assume a 32% tax rate). Also, assume that any loss before taxes yields a 32% tax benefit. (Round "per unit" answers to 2 decimal places. Enter losses and tax benefits, if any, as negative values.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 58,000 units of each product. Sales and costs for each product follow.
 

  Product T   Product O
Sales   $ 974,400       $ 974,400  
Variable costs     779,520         194,880  
Contribution margin     194,880         779,520  
Fixed costs     46,880         631,520  
Income before taxes     148,000         148,000  
Income taxes (32% rate)     47,360         47,360  
Net income   $ 100,640       $ 100,640  
 

 

2. Assume that the company expects sales of each product to decline to 41,000 units next year with no change in unit selling price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as just shown with columns for each of the two products (assume a 32% tax rate). Also, assume that any loss before taxes yields a 32% tax benefit. (Round "per unit" answers to 2 decimal places. Enter losses and tax benefits, if any, as negative values.)

HENNA CO.
Forecasted Contribution Margin Income Statement
Product T
Product O
Total
Units
$ Per unit
Total
S Per unit
Total
Sales
Variable cost
Contribution margin
Fixed costs
Income (Loss) before taxes
income taxes (tax benefit)
Net income (loss)
Transcribed Image Text:HENNA CO. Forecasted Contribution Margin Income Statement Product T Product O Total Units $ Per unit Total S Per unit Total Sales Variable cost Contribution margin Fixed costs Income (Loss) before taxes income taxes (tax benefit) Net income (loss)
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