Question
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
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 2017, management estimates the following revenues and costs.
Sales $1,840,000 Selling expensesvariable $50,000 Direct materials- 410,000 Selling expenses- fixed 45,000 Direct labor- 350,000 Administrative expensesvariable 16,000 Manufacturing overheadvariable 370,000 Administrative expensesfixed 60,000 Manufacturing overheadfixed 365,750
1. Prepare a CVP income statement for 2017 based on managements estimates.
2. Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.)
Variable cost per bottle $______
3. Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.)
(Part 1)Compute the break-even point _____ units
(Part 2)Compute the break-even point $_____
4) Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.)
Contribution margin ratio ____ %
Margin of safety ratio ____ %
5)Determine the sales dollars required to earn net income of $220,500. (Round answer to 0 decimal places, e.g. 1,225.) Required sales dollars $_____
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