Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in...
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Accounting
Henna Company produces and sells two products, Carvings and Mementos. 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. Income statements for each product follow.
| Carvings | Mementos | |
|---|---|---|
| Sales | $ 747,600 | $ 747,600 |
| Variable costs | 523,320 | 149,520 |
| Contribution margin | 224,280 | 598,080 |
| Fixed costs | 108,280 | 482,080 |
| Income | $ 116,000 | $ 116,000 |
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 a contribution margin income statement for the next year (as shown above with columns for each of the two products).
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