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Henna Co. produces and sells two products, T and O. It manufactures these products in separate...

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 42,000 units of each product. Sales and costs for each product follow.

Product T Product O
Sales $ 747,600 $ 747,600
Variable costs 523,320 149,520
Contribution margin 224,280 598,080
Fixed costs 108,280 482,080
Income before taxes 116,000 116,000
Income taxes (35% rate) 40,600 40,600
Net income $ 75,400 $ 75,400

2. Assume that the company expects sales of each product to decline to 25,000 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 35% tax rate). Also, assume that any loss before taxes yields a 35% 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 Producto Units $ Per unit Total $ Per unit Total Total Sa

3. Assume that the company expects sales of each product to increase to 56,000 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 35% tax rate). (Round "per unit" answers to 2 decimal places.)

HENNA CO. Forecasted Contribution Margin Income Statement Product I Producto Units $ Per unit Total $ Per unit Total Total Co

HENNA CO. Forecasted Contribution Margin Income Statement Product T Producto Units $ Per unit Total $ Per unit Total Total Sales Contribution margin Net income (loss)
HENNA CO. Forecasted Contribution Margin Income Statement Product I Producto Units $ Per unit Total $ Per unit Total Total Contribution margin Net income (loss)
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HENNA CO.
Forecasted Contribution margin Income statement
Product T Product O Total
Units $ per unit Total $ per unit Total
Sales 25000 $17.80 $4,45,000 $17.80 $4,45,000 $8,90,000
Less: Variable cost 25000 $12.46 $3,11,500 $3.56 $89,000 $4,00,500
Contribution margin 25000 $5.34 $1,33,500 $14.24 $3,56,000 $4,89,500
Less: Fixed Cost $1,08,280 $4,97,520 $6,05,800
Net Income before tax/(Loss) $25,220 -$1,41,520 -$1,16,300
Less: Income tax/(tax benefit) @ 35% $8,827 $49,532 $40,705
Net Income/(Loss) $16,393 -$91,988 -$75,595
HENNA CO.
Forecasted Contribution margin Income statement
Product T Product O Total
Units $ per unit Total $ per unit Total
Sales 56000 $17.80 $9,96,800 $17.80 $9,96,800 $19,93,600
Less: Variable cost 56000 $12.46 $6,97,760 $3.56 $1,99,360 $8,97,120
Contribution margin 56000 $5.34 $2,99,040 $14.24 $7,97,440 $10,96,480
Less: Fixed Cost $1,08,280 $4,97,520 $6,05,800
Net Income before tax/(Loss) $1,90,760 $2,99,920 $4,90,680
Less: Income tax/(tax benefit) @ 35% $66,766 $1,04,972 $1,71,738
Net Income/(Loss) $1,23,994 $4,04,892 $5,28,886
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