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

Required:
1.	Compute the break-even point in dollar sales for each product. (Enter CM ratio as percentage rounded to 2 decimal places.)

Product T
Contribution Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
					0
Break-even point in dollars
	Choose Numerator:	/	Choose Denominator:	=	Break-Even Point in Dollars
		/		=	Break-even point in dollars
					0
Product O
Contribution Margin Ratio
		/		=	Contribution margin ratio
					0
Break-Even Point in Dollars
		/		=	Break-even point in dollars
					0

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 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
					$0	$0
			0		0	0
Contribution margin
						0
			0			0
Net income (loss)

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 T		Product O		Total
	Units	$ Per unit	Total	$ Per unit	Total
			$0		$0	$0
			0		0	0
Contribution margin
						0
			0
Net income (loss)			$0