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 Incone 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 2. Assume that the company expects sales of each product to decline to 30,000 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).

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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
2. Assume that the company expects sales of each product to decline to 30,000 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).
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 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 2. Assume that the company expects sales of each product to decline to 30,000 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).
2. Assume that the company expects sales of each product to decline to 30,000 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).
Contribution margin
Income (loss)
Units
HENNA Company
Contribution Margin Income Statement
Carvings
$ Per unit
$
Total
0
Mementos
$ Por unit
$
Total
0
0 $
Total
0
0
0
0
Transcribed Image Text:2. Assume that the company expects sales of each product to decline to 30,000 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). Contribution margin Income (loss) Units HENNA Company Contribution Margin Income Statement Carvings $ Per unit $ Total 0 Mementos $ Por unit $ Total 0 0 $ Total 0 0 0 0
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