Solution-Prepare forecasted financial results for next year

Prepare forecasted financial results for next year

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Reference no: EM131816201

Question - 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 46,000 units of each product. Sales and costs for each product follow.

	Product T	Product O
Sales	$800,400	$800,400
Variable costs	640,320	160,080
Contribution margin	160,080	640,320
Fixed costs	32,080	512,320
Income before taxes	128,000	128,000
Income taxes (35% rate)	44,800	44,800
Net income	$83,200	$83,200

Assume that the company expects sales of each product to decline to 29,000 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 a 35% tax rate). Also, assume that any loss before taxes yields a 35% tax savings.

Reference no: EM131816201

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Prepare forecasted financial results for next year

Reference no: EM131816201

Reference no: EM131816201

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