Corbin Company bottles and distributes LO-KAL, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bot- tle. At full (100%) plant capacity, management estimates the following revenues and costs.

Instructions

(a) Prepare a CVP income statement for 2002 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 required to earn net income of $240,000.

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Net sales $2,000,000 Direct materials 360,000 Direct labor 650,000 Selling expenses-variable Selling expenses-fixed Administrative expenses- $ 90,000 150,000 Manufacturing overhead- variable 30,000 variable 270,000 Administrative expenses- Manufacturing overhead- fixed 70,000 fixed 260,000