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I missed last class and I am strugglimg understanding this question! 1 P5.3 Prepare a CVP income statement, and compute break-even point, contribution margin ratio,
I missed last class and I am strugglimg understanding this question!
1 P5.3 Prepare a CVP income statement, and compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income. 3 4 Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 5 cents per 16-ounce bottle to retailers. For the year 2022, management estimates the 6 following revenues and costs. 7 8 Sales $ 1,800,000 9 Direct materials 430,000 10 Direct labor 360,000 11 Manufacturing overhead-variable 380,000 12 Manufacturing overhead-fixed 280,000 13 Selling expenses-variable 70,000 14 Selling expenses-fixed 65,000 15 Administrative expenses-variable 20,000 16 Administrative expenses-fixed 60,000 17 18 Instructions 19 a. Prepare a CVP income statement for 2022 based on management estimates. Include 20 columns for per unit and percent of sales information. 21 b. Compute the break-even point in (1) sales units and (2) sales dollars. 22 c. Compute the contribution margin ratio and the margin of safety ratio. (Round to the 23 nearest full percent.) 24 d. Determine the sales dollars required to earn net income of $180,000. 25 26 NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a 27 cell), into the yellow shaded input cells. 28 a. JORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2022 Percent of Sales Dollar Amounts Per Unit Fixed expenses 5 Sales 7 Variable expenses B Cost of goods sold 9 Selling expenses 0 Administrative expenses -1 Total variable expenses 2 Contribution margin 13 74 Cost of goods sold 15 Selling expenses 46 Administrative expenses 47 Total fixed expenses 48 Net income 49 50 51 b. (1) Break-even point in units 52 Unit selling price 53 Unit variable costs 54 Unit contribution margin 55 56 Fixed costs 57 Unit contribution margin 58 Break-even point in units 59 + -1 (2) Break-even point in dollars -2 Break-even point in units 3 Unit selling price 64 Break-even point in dollars 65 56 57 c. Compute the contribution margin ratio and the margin of safety ratio. (Round to the 58 nearest full percent.) 59 70 Contribution margin ratio 71 Unit contribution margin 72 Unit selling price 73 Contribution margin ratio 74 Margin of safety ratio 76 Total sales dollars 77 Break-even sales (dollars) 78 Margin of safety (dollars) 79 Total sales 80 Margin of safety ratio 81 82 83 d. Determine the sales dollars requires to earn net income of $180,000. 84 85 Sales dollars required to earn target income 86 Fixed costs 87 Target income 88 Total fixed cost + target income 89 Contribution margin ratio 90 Sales dollars required 75 Step by Step Solution
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