Problem 21-5A Break-even analysis, different cost structures, and income calcula

Question

Problem 21-5A Break-even analysis, different cost structures, and income calculations LO C2, A1, P4 The following information applies to the questions displayed below) Henna Co. produces and sells two products, T and O. t manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the c Sales and costs for each product follow ompany sold 56,000 units of each product Product 0 $ 929,608 185, 928 743,680 597,680 146,000 51,180 S 94,900 Sales Variable costs 650,720 Contribution margin Fixed costs Income before taxes Income taxes (32% rate) Net 132,880 146,000 51,100 $ 94,900

Explanation / Answer

HENNA COMPANY Forecasted Contribution Margin Income Statement Product T Product O Calculation for unit Unit $per unit Total Unit $per unit Total TOTAL A B C=A*B D E F=D*E Sales in units 70000 70000 Calculation for units (929600/56000) Sales Revenue            70,000 $           16.60 $    1,162,000          70,000 $             16.60 $     1,162,000 (929600/56000) $ 2,324,000 (650720/56000) Variable Costs 70000 $           11.62 $        813,400 70000 $               3.32 $        232,400 (185920/56000) $ 1,045,800 (16.60-11.62) Contribution Margin 70000 $             4.98 $        348,600 70000 $             13.28 $        929,600 (16.60-3.32) $ 1,278,200 Fixed Costs $132,880 $597,680 $     730,560 Income before taxes $        215,720 $        331,920 $     547,640 Income Taxes(35%) $          75,502 $        116,172 $     191,674 Net Income $        140,218 $        215,748 $     355,966

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