Vanna 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 40,000 units of each product. Sales and costs for each product follow.

Assume that the company expects sales of each product to decline to 23,000 units next year with no change in unit sales 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. (Enter Losses and Tax benefits with a minus sign, and all the remaining values as positive numbers.)

Assume that the company expects sales of each product to increase to 54,000 units next year with no change in unit sales 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). (Enter all values as positive.)

Product T Product O $720,000 720,000 576,000 44,000 144,000 576,000 34,000 466,000 Sales Variable costs Contribution margin Fixed costs Income before taxes Income taxes (32% rate) 110,000 35,200 110,000 35,200 Net income $ 74,800 74,800