Question
Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have
Henna Company produces and sells two products, Carvings and Mementos. 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. Income statements for each product follow.
Carvings
Mementos
Sales
$ 2,000,000
$ 2,000,000
Variable costs
1,600,000
250,000
Contribution margin
400,000
1,750,000
Fixed costs
125,000
1,475,000
Income
$ 275,000
$ 275,000
Required: 1. Compute the break-even point in dollar sales for each product. (Show CM ratio as percentage rounded to 3 decimal places.)
- 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 a contribution margin income statement for the next year (as shown above with columns for each of the two products).
- Based solely on part 2, assume that one of the products shows a net loss. Detail how many additional units of that product woud need to be sold in order for it to break-even.
- 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 a contribution margin income statement for the next year (as shown above with columns for each of the two products).
YOU MUST SHOW ALL OF YOUR COMPUTATIONS, APPROPRIATELY LABELED. UPLOAD YOUR SOLUTION AS PROVIDED.
Henna Company produces and sells two products, Carvings and Mementos. 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. Income statements for each product follow.
Carvings
Mementos
Sales
$ 2,000,000
$ 2,000,000
Variable costs
1,600,000
250,000
Contribution margin
400,000
1,750,000
Fixed costs
125,000
1,475,000
Income
$ 275,000
$ 275,000
Required: 1. Compute the break-even point in dollar sales for each product. (Show CM ratio as percentage rounded to 3 decimal places.
YOU MUST SHOW ALL OF YOUR COMPUTATIONS, APPROPRIATELY LABELED. UPLOAD YOUR SOLUTION AS PROVIDED.
Henna Company produces and sells two products, Carvings and Mementos. 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. Income statements for each product follow.
| Carvings | Mementos |
Sales | $ 2,000,000 | $ 2,000,000 |
Variable costs | 1,600,000 | 250,000 |
Contribution margin | 400,000 | 1,750,000 |
Fixed costs | 125,000 | 1,475,000 |
Income | $ 275,000 | $ 275,000 |
Required: 1. Compute the break-even point in dollar sales for each product. (Show CM ratio as percentage rounded to 3 decimal places.)
- 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 a contribution margin income statement for the next year (as shown above with columns for each of the two products).
- Based solely on part 2, assume that one of the products shows a net loss. Detail how many additional units of that product woud need to be sold in order for it to break-even.
- 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 a contribution margin income statement for the next year (as shown above with columns for each of the two products).
YOU MUST SHOW ALL OF YOUR COMPUTATIONS, APPROPRIATELY LABELED. UPLOAD YOUR SOLUTION AS PROVIDED.
Henna Company produces and sells two products, Carvings and Mementos. 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. Income statements for each product follow.
| Carvings | Mementos |
Sales | $ 2,000,000 | $ 2,000,000 |
Variable costs | 1,600,000 | 250,000 |
Contribution margin | 400,000 | 1,750,000 |
Fixed costs | 125,000 | 1,475,000 |
Income | $ 275,000 | $ 275,000 |
Required: 1. Compute the break-even point in dollar sales for each product. (Show CM ratio as percentage rounded to 3 decimal places.
YOU MUST SHOW ALL OF YOUR COMPUTATIONS, APPROPRIATELY LABELED. UPLOAD YOUR SOLUTION AS PROVIDED.
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Horngrens Accounting The Financial Chapters
Authors: Tracie Miller Nobles, Brenda Mattison
13th Edition
0136162185, 9780136162186
