Vanna 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 47,000 units of each product. Sales and costs for each product follow.

Product T

Product O

Sales

$

813,100

$

813,100

Variable costs

487,860

81,310

Contribution margin

325,240

731,790

Fixed costs

194,240

600,790

Income before taxes

131,000

131,000

Income taxes (30% rate)

39,300

39,300

Net income

$

91,700

$

91,700

Assume that the company expects sales of each product to increase to 61,000 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 shown with columns for each of the two products (assume a 30% tax rate).

sales	61000	17.30	1,055,300	17.30	1,055,300	2,110,600
variable cost	61000	10.28	633,180	1.73	105,530	738,710
contribution margin	61000	6.92	422,120	15.57	949,770	1,371,890
fixed costs			194240		600790	795030
income loss before taxes			227880		348980	576860
income taxes tax benefit
net income loss

Answer rating: 100% (QA)

sales 30000 1730 519000 1730 519000 1038000 variable cost 3000... View the full answer