Question

I need help with my assignment please..

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 45,000 units of each product. Sales and costs for each product follow. Sales Variable costs Product T $787,500 551,250 Product O $787,500 78,750 Contribution margin Fixed costs 236,250 111,250 708,750 583,750 Income before taxes Income taxes (40% rate) 125,000 50,000 125,000 50,000 Net income $ 75,000 $ 75,000

Answer 1

1.
Product T
Contribution Margin Ratio = Contribution Margin / Sales x 100
= $236250 / 787500 = 30%

Break Even Point in Dollars = Fixed Costs / Contribution Margin ratio
= $111250 / 30% = $370834

Product O
Contribution Margin Ratio = Contribution Margin / Sales x 100
= $708750 / 787500 = 90%

Break Even Point in Dollars = Fixed Costs / Contribution Margin ratio
= $583750 / 90% = $648612

2.

		Product T		Product O		Total
	Units	$ per unit	Total	$ per unit	Total
Sales Revenue	28000	$               17.50	$          490,000	$             17.50	$        490,000	$           980,000
Variable Costs	28000	$               12.25	$          343,000	$               1.75	$           49,000	$           392,000
Contribution margin	28000	$                  5.25	$          147,000	$             15.75	$        441,000	$           588,000
Fixed costs			$          111,250		$        583,750	$           695,000
Income before taxes			$            35,750		$       -142,750	$         -107,000
Income taxes			$            14,300		$         -57,100	$            -42,800
Net Income			$            21,450		$         -85,650	$            -64,200

3.

		Product T		Product O		Total
	Units	$ per unit	Total	$ per unit	Total
Sales Revenue	59000	$               17.50	$      1,032,500	$             17.50	$     1,032,500	$       2,065,000
Variable Costs	59000	$               12.25	$          722,750	$               1.75	$        103,250	$           826,000
Contribution margin	59000	$                  5.25	$          309,750	$             15.75	$        929,250	$       1,239,000
Fixed costs			$          111,250		$        583,750	$           695,000
Income before taxes			$          198,500		$        345,500	$           544,000
Income taxes			$            79,400		$        138,200	$           217,600
Net Income			$          119,100		$        207,300	$           326,400