Jorge Company bottles and distributes B-Lite, 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 2014, management estimates the following revenues and costs.

Sales $1,800,000 Selling expenses—variable $70,000 Direct materials 430,000 Selling expenses—fi xed 65,000 Direct labor 360,000 Administrative expenses—

Manufacturing overhead— variable 20,000 variable 380,000 Administrative expenses—

Manufacturing overhead— fi xed 60,000 fi xed 280,000 Instructions

(a) Prepare a CVP income statement for 2014 based on management’s estimates. (Show column for total amounts only.)

(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 $180,000.AppendixLO1