Required Information
[The following information applies to the questions displayed below.]
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 44,000 units of each product. Income statements for each product follow.
Carvings Mementos
Sales $ 774,400 $ 774,400
Variable costs 464,640 154,880
Contribution margin 309,760 619,520
Fixed costs 187,760 497,520
Income $ 122,000 $ 122,000
3. Assume that the company expects sales of each product to increase to 58,000 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).
Note: Round "per unit" answers to 2 decimal places.
Answer is complete but not entirely correct.
HENNA COMPANY
Contribution Margin Income Statement
Item Units Carvings Mementos Total
$ Per unit Total $ Per unit Total
Sales 58,000 $ 17.60 $ 1,020,800 $ 17.60 $ 1,020,800 $ 2,041,600
Variable cost 58,000 $ 10.56 $ 612,480 14.08 $ 816,640 1,429,120
Contribution margin 58,000 $ 7.04 $ 408,320 $ 3.52 $ 204,160 612,480
Fixed costs (187,760) (497,520) 309,760
Income (loss) $ 220,560 $ (293,360) $ 302,720