Question

[The following information applies to the questions displayed below.] Henna Co. produces and sells two products,...

[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 43,000 units of each product. Sales and costs for each product follow.

Product T Product O
Sales $ 761,100 $ 761,100
Variable costs 608,880 76,110
Contribution margin 152,220 684,990
Fixed costs 33,220 565,990
Income before taxes 119,000 119,000
Income taxes (32% rate) 35,700 35,700
Net income $ 83,300 $ 83,300


Assume that the company expects sales of each product to decline to 26,000 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 30% tax rate). Also, assume that any loss before taxes yields a 30% tax benefit. (Round "per unit" answers to 2 decimal places. Enter losses and tax benefits, if any, as negative values.)

Hint: Prepare a forecasted contribution Margin income statesment for Henna Company for products T and O, with per unit values and total values.

I believe the rows in order should be Sales, Variable Cost, Contribution Margin, Fixed costs, Income before Taxes, Income taxes(tax benefit), and Net income (loss).

Homework Answers

Answer #1

Solution :

Forecasted contribution margin income statement - Henna Co. (Sales volume -26000 units)
Particulars Product T Product O
Per unit Amount Per unit Amount
Sales $17.70 $460,200.00 $17.70 $460,200.00
Variable costs $14.16 $368,160.00 $1.77 $46,020.00
contribution margin $3.54 $92,040.00 $15.93 $414,180.00
Fixed costs $33,220.00 $565,990.00
Income before taxes $58,820.00 -$151,810.00
Income taxes (Tax benefit) (30%) $17,646.00 -$45,543.00
Net Income (Loss) $41,174.00 -$106,267.00
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution...
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,600 units at $300 each) $ 3,180,000 Variable costs (10,600 units at $240 each) 2,544,000 Contribution margin 636,000 Fixed costs 480,000 Pretax income $ 156,000 If the company raises its selling price to $320 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28...
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution...
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,600 units at $300 each) $ 3,180,000 Variable costs (10,600 units at $240 each) 2,544,000 Contribution margin 636,000 Fixed costs 480,000 Pretax income $ 156,000 1. Compute Hudson Co.'s break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. 1. | Break-even point...
Required information Skip to question [The following information applies to the questions displayed below.] Adams Company...
Required information Skip to question [The following information applies to the questions displayed below.] Adams Company makes and sells products with variable costs of $24 each. Adams incurs annual fixed costs of $321,280. The current sales price is $88. Note: The requirements of this question are interdependent. For example, the $256,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements. rev: 02_12_2020_QC_CS-199849, 07_24_2020_QC_CS-220166 e....
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28...
[The following information applies to the questions displayed below.] Dowell Company produces a single product. Its...
[The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) $ 966,000 $ 1,886,000 Cost of goods sold ($31 per unit) 651,000 1,271,000 Gross margin 315,000 615,000 Selling and administrative expenses 282,000 322,000 Net income $ 33,000 $ 293,000 Additional Information Sales and production data for these first two years follow. 2016 2017 Units produced...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 12 Direct labor 20 15...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT