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2. Assume that the company expects sales of each p...




2. Assume that the company expects sales of each product to decline to VII. Break-even analysis, different cost structures, and income calculations Letter 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 50,000 units of each product. Sales and costs for each product follow. Product T Product O Sales????????????????. $800,000 $800,000 Variable costs????????????... 560,000 100,000 Contribution margin??????????. 240,000 700,000 Fixed costs?????????????? 100,000 560,000 Income before taxes??????????. 140,000 140,000 Income taxes (32% rate)????????.. 44,800 44,800 Net income?????????????... $ 95,200 $ 95,200 33,000 units next year with no change in unit sales 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 32% tax rate). Also, assume that any loss before taxes yields a 32% tax savings.


Paper#3104 | Written in 18-Jul-2015

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