Sales Variable costs Contribution margirn Fixed costs Income before taxes Income taxes (32% rate) Net income $800,000 $800,000 560.000 100.000 240,000 700.000 100.000 560.000 140,000 140.000 -44.800 $ 95,200 44.800 95,200 Required Page 844 1. Compute the break even point in dollar sales for each product. (Round the answer to the next whole dollar.) 2. Assume that the company expects sales of each product to decline to 33.000 units next year with no change in the unit selling price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 32% tax rate, and that any loss before taxes yields a 32% tax benefit). Check (2) After-tex income BB, $39,712, TT, $(66,640) 3. Assume that the company expects sales of each product to increase to 64.000 units next year with no change in the unit selling prices. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 32% tax rate). (3) After-tox income B0. $HO,896. TT. $228.480 Analysis Component 4. If sales greatly increase, which product would experience a greater increase in profit? Explain. 5. Describe some factors that might have created the different cost structures for these two products. Sales Variable costs Contribution margirn Fixed costs Income before taxes Income taxes (32% rate) Net income $800,000 $800,000 560.000 100.000 240,000 700.000 100.000 560.000 140,000 140.000 -44.800 $ 95,200 44.800 95,200 Required Page 844 1. Compute the break even point in dollar sales for each product. (Round the answer to the next whole dollar.) 2. Assume that the company expects sales of each product to decline to 33.000 units next year with no change in the unit selling price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 32% tax rate, and that any loss before taxes yields a 32% tax benefit). Check (2) After-tex income BB, $39,712, TT, $(66,640) 3. Assume that the company expects sales of each product to increase to 64.000 units next year with no change in the unit selling prices. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown here with columns for each of the two products (assume a 32% tax rate). (3) After-tox income B0. $HO,896. TT. $228.480 Analysis Component 4. If sales greatly increase, which product would experience a greater increase in profit? Explain. 5. Describe some factors that might have created the different cost structures for these two products
