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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 60,000 units of each product. Sales and costs for each product follow.

Product T Product OSales $1,020,000 $1,020,000 Variable costs 612,000 204,000 Contribution margin 408,000 816,000 Fixed costs 258,000 666,000 Income before taxes 150,000 150,000 Income taxes (35% rate) 52,500 52,500 Net income $97,500 $97,500

Required: 1. Compute the break-even point in dollar sales for each product.

2. Assume that the company expects sales of each product to decline to 43,000 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.)

3. Assume that the company expects sales of each product to increase to 74,000 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.)

! Required information (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 60,000 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 $1,020,000 612, 000 408,000 258, 000 150,000 52, 500 $ 97,500 Product 0 $1,020,000 204, 000 816, 000 666, 000 150,000 52, 500 $ 97,500 Required: 1. Compute the break-even point in dollar sales for each product. (Enter CM ratio as percentage rounded to 2 decimal places.) Required: 1. Compute the break-even point in dollar sales for each product. (Enter CM ratio as percentage rounded to 2 decimal places.) X Answer is not complete. Product T Contribution Margin Ratio Choose Numerator: 1 Choose Denominator: Contribution Margin Ratio Contribution margin ratio 200.00% Contribution margin $ 408,000 Sales 7 $ 204,000 Break-Even Point in Dollars Choose Numerator: / Choose Denominator: Break-Even Point in Dollars Break-even point in dollars / 0 Producto Contribution Margin Ratio / Contribution margin ratio 0 Break-Even Point in Dollars / Break-even point in dollars 0 HENNA CO. Forecasted Contribution Margin Income Statement Product T Producto Total Units $ Per unit Total $ Per unit Total $ 0 $ 0 0 0 0 Contribution margin Oo 0 Net income (loss) HENNA CO. Forecasted Contribution Margin Income Statement Product T Product O Units $ Per unit Total $ Per unit Total Total $ 0 $ 0 $ 0 0 Contribution margin o 0 Net income (loss) $ 0

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