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Henna 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 56,000 units of each product. Sales and costs for each product follow.

Product T Product O
Sales $929,600 $929,600
Variable costs 650,720 185,920
Contribution margin 278,880 743,680
Fixed costs 132,880 597,680
Income before taxes 146,000 146,000
Income taxes (32% rate) 51,100 51,100
Net income $94,900 $94,900

Required:
Compute the break-even point in dollar sales for each product.



Sagot :

Anthougoidn

Answer:

Henna Co.

Break-even point in dollar sales:

= Total costs = Sales revenue

                                                       Product T       Product O

Break-even point (sales dollars) = $783,600      $783,600

Explanation:

a) Data and Calculations:

                                     Product T       Product O

Sales                           $929,600      $929,600

Variable costs               650,720         185,920

Contribution margin     278,880         743,680

Fixed costs                    132,880         597,680

Income before taxes    146,000          146,000

Income taxes (32% rate) 51,100             51,100

Net income                  $94,900        $94,900

Break-even point in dollar sales:

= Total costs = Sales revenue

                                    Product T       Product O

Variable costs             $650,720       $185,920  

Fixed costs                     132,880         597,680

Total costs                     783,600         783,600

Sales revenue             $783,600      $783,600

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