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 50,000 units of each product. Income statements for each product follow. Sales Variable costs Contribution margin Fixed costs Income Carvings $2,000,000 1,600,000 400,000 125,000 $ 275,000 Mementos $ 2,000,000 250,000 1,750,000 1,475,000 $ 275,000 3. Assume that the company expects sales of each product to increase to 60,000 units next year with no change in unit seing price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products).
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 50,000 units of each product. Income statements for each product follow. Sales Variable costs Contribution margin Fixed costs Income Carvings $2,000,000 1,600,000 400,000 125,000 $ 275,000 Mementos $ 2,000,000 250,000 1,750,000 1,475,000 $ 275,000 3. Assume that the company expects sales of each product to increase to 60,000 units next year with no change in unit seing price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 50,000 units of each product. Income statements for each product follow.
Sales
Variable costs
Contribution margin
Fixed costs
Income
Contribution margin
3. Assume that the company expects sales of each product to increase to 60,000 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).
Income (loss)
Carvings
$2,000,000
1,600,000
400,000
125,000
$ 275,000
Units
Mementos
$ 2,000,000
250,000
1,750,000
1,475,000
$ 275,000
HENNA COMPANY
Contribution Margin Income Statement
Carvings
$ Per unit
$
Total
0
$ Per unit
Mementos
$
Total
0
0 $
Total
0
0
0
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