Required information Problem 05-5A Break-even analysis, different cost structures, and income calculations LO C2, A1, P4 [The following information applies to the questions displayed below.) 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. Sales Variable costs Contribution margin Fixed costs Income before taxes Income taxes (35% rate) Net income Product T $747,600 523,320 224,280 108,280 116,000 40,600 $ 75,400 Producto $747,600 149,520 598,080 482,080 116,000 40,600 $ 75,400 Problem 05-5A Part 2 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.) Problem 05-5A Part 2 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.) Total HENNA CO. Forecasted Contribution Margin Income Statement Product T Producto Units $ Per unit Total $ Per unit Total 25,000 $ 0 25,000 0 25,000 712,000 $ 0 0 0 712,000 0 Sales Variable cost Contribution margin Fixed costs Income (Loss) before taxes Income taxes (tax benefit) Net Income (los) 0 0 Problem 05-5A Part 3 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 Producto Units $ Per unit Total $ Per unit Total $ 0 $ Total 0 $ 0 0 0 0 Contribution margin 0 0 $ 0 Net income (loss)
