Colaw Company bottles and distributes No-FIZZ, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bottle. For the year 2012, management estimates the following revenues and costs.

Instructions
(a) Prepare a CVP income statement for 2012 based on management's estimates.
(b) Compute the break-even point in (1) units and (2) dollars.
(c) Compute the contribution margin ratio and the margin of safety ratio.
(d) Determine the sales dollars required to earn net income of$390,000.

Transcribed Image Text:

$2,000,000 Selling expenses-variable 80,000 150,000 Net sales Direct materials Direct labor Manufacturing overhead 360,000 450,000 Adinistrative expenses- Selling expenses-fixed 40,000 70,000 variable variable Administrative expenses- Manufacturing overhead fixed fixed 280,000