Question
19.5 Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They
19.5 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 43,000 units of each product. Sales and costs for each product follow.
Product T Product O Sales $ 761,100 $ 761,100 Variable costs 608,880 76,110 Contribution margin 152,220 684,990 Fixed costs 33,220 565,990 Income before taxes 119,000 119,000 Income taxes (30% rate) 35,700 35,700 Net income $ 83,300 $ 83,300
3. Assume that the company expects sales of each product to increase to 57,000 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.)
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