Lyman Company bottles and distributes Livit, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 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. (Round to nearest full percent.)

(d) Determine the sales dollars required to earn net income of $238,000.

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Net sales Direct labor Manufacturing overhead- Manufacturing overhead- Selling expenses–variable Selling expenses-fixed Administrative expenses- Administrative expenses- $1,800,000 $70,000 65,000 Direct materials 352,000 20,000 variable variable 316,000 fixed 60,000 fixed 283,000