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 50,000 units of each product. Sales and costs for each product follow.

Product T Product O Sales $ 2,000,000 $ 2,000,000 Variable costs 1,600,000 250,000 Contribution margin 400,000 1,750,000 Fixed costs 1,475,000 125,000 Income before taxes 275,000 1275,000 Income taxes (32% rate) 88,000 88,000 Net income $ 187,000 $ 187,000

1. 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 32% tax rate). Also, assume that any loss before taxes yields a 32% tax savings. (Round "per unit" answers to 2 decimal places. Enter losses and tax benefits, if any, as negative values.)

2. Assume that the company expects sales of each product to increase to 60,000 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 32% tax rate). (Round "per unit" answers to 2 decimal places.)