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. 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.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 10E
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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
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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