Martinez 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 $1,850,000 Selling expensesvariable $50,000

Direct materials 430,000 Selling expensesfixed 50,000

Direct labor 330,000 Administrative expensesvariable 32,500

Manufacturing overheadvariable 360,000 Administrative expensesfixed 60,000

Manufacturing overheadfixed 418,500

1) Compute the break-even point in (1) units and (2) dollars.

2) Compute the contribution margin ratio and the margin of safety ratio.

3) Determine the sales dollars required to earn net income of $141,750.

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