Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below. 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 47,000 units of each product. Sales and costs for each product follow. Sales Variable costs Contribution margin Fixed costs Income before taxes Income taxes (32% rate) Net income Product T $813,100 487,860 325,240 194,240 131,000 39,300 91,700 Producto $813,100 81,310 731,790 600,790 131,00 39,300 $ 91,700

Explanation / Answer

Assume that the company expects sales of each product to decline to 30,000 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 30% tax rate). Also, assume that any loss before taxes yields a 30% tax savings. (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 $ Per unit Total Sales 30,000 $17.3 $519,000 $17.3 $519,000 $1,038,000 Variable costs 30,000 $10.38 $311,400 $1.73 $51,900 $363,300 Contribution margin 30,000 $6.92 $207,600 $15.57 $467,100 $674,700 Fixed costs $194,240 $600,790 $795,030 Income (Loss) before taxes $13,360 0 -$133,690 -$120,330 Income taxes (tax benefit)(30% rate) $4,008 -$40,107 -$36,099 Net income (loss) $9,352 -$93,583 -$84,231 Assume that the company expects sales of each product to increase to 61,000 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 shown with columns for each of the two products (assume a 30% tax rate). (Round "per unit" answers to 2 decimal places.) HENNA CO. Forecasted Contribution Margin Income Statement Product T Product O Total Units $ Per unit Total $ Per unit Total Sales 47,000 $17.3 $813,100 $17.3 $813,100 $1,626,200 Variable costs 47,000 $10.38 $487,860 $1.73 $81,310 $569,170 Contribution margin 47,000 $6.92 $325,240 $15.57 $731,790 $1,057,030 Fixed costs $194,240 $600,790 $795,030 Income (Loss) before taxes $131,000 0 $131,000 $262,000 Income taxes (tax benefit)(30% rate) $39,300 $39,300 $78,600 Net income (loss) $91,700 $91,700 $183,400

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.