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P13-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income Jorge Company bottles
P13-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income 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 2022, management estimates the following revenues Sales $1,800,000 Selling expenses - variable $70,000 Direct materials 430,000 Selling expenses - fixed 65,000 Direct labor 360,000 Administrative expenses - variable 20,000 Manufacturing overhead- variable 380,000 Administrative expenses - fixed 60,000 Manufacturing overhead -fixed 280,000 Instructions (a) Prepare a CVP income statement for 2022 based on management 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 the nearest full percent.) (d) Determine the sales dollars required to earn net income of $180,000. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Prepare a CVP income statement for 2022 based on management estimates. (show column for total amounts only.) JORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2022 Sales Variable expenses Cost of goods sold Selling expenses Administrative expenses Total variable expenses Contribution margin Fixed expenses Cost of goods sold Selling expenses Administrative expenses Total fixed expenses Net income (b) Compute the break-even point in (1) units and (2) dollars. (b)(1) Break-even point in units Unit selling price Unit variable costs Value Unit contribution margin ? Fixed costs Value Unit contribution margin Value Break-even point in units ? (b)(2) Break-even point in dollars Break-even point in units Value Unit selling price Value Break-even point in dollars ? (c ) Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full percent.) Contribution margin ratio Unit contribution margin Value Unit selling price Value Contribution margin ratio ? Margin of safety ratio Total sales Value Break-even sales Value Margin of safety (dollars) Value Total sales Value Margin of safety ratio Value (d) Determine the sales dollars required to earn net income of $180,000. Sales dollars required to earn target income Fixed costs Value Target income Value Total fixed cost + target income ? Contribution margin ratio ? Sales dollars required ? After you have completed P18-3A, consider the following additional question Assume that the unit selling price per bottle changed to $0.60 each, and fixed manufacturing costs increased to $300,000. Show impact of these changes on calculations.
P13-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio | ||||||||||||
and sales for target net income | ||||||||||||
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 2022, management estimates the following revenues | ||||||||||||
Sales | $1,800,000 | Selling expenses - variable | $70,000 | |||||||||
Direct materials | 430,000 | Selling expenses - fixed | 65,000 | |||||||||
Direct labor | 360,000 | Administrative expenses - variable | 20,000 | |||||||||
Manufacturing overhead- variable | 380,000 | Administrative expenses - fixed | 60,000 | |||||||||
Manufacturing overhead -fixed | 280,000 | |||||||||||
Instructions | ||||||||||||
(a) | Prepare a CVP income statement for 2022 based on management 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 the nearest full percent.) | |||||||||||
(d) | Determine the sales dollars required to earn net income of $180,000. | |||||||||||
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | ||||||||||||
(a) | Prepare a CVP income statement for 2022 based on management estimates. (show column for total amounts only.) | |||||||||||
JORGE COMPANY | ||||||||||||
CVP Income Statement (Estimated) | ||||||||||||
For the Year Ending December 31, 2022 | ||||||||||||
Sales | ||||||||||||
Variable expenses | ||||||||||||
Cost of goods sold | ||||||||||||
Selling expenses | ||||||||||||
Administrative expenses | ||||||||||||
Total variable expenses | ||||||||||||
Contribution margin | ||||||||||||
Fixed expenses | ||||||||||||
Cost of goods sold | ||||||||||||
Selling expenses | ||||||||||||
Administrative expenses | ||||||||||||
Total fixed expenses | ||||||||||||
Net income | ||||||||||||
(b) | Compute the break-even point in (1) units and (2) dollars. | |||||||||||
(b)(1) | Break-even point in units | |||||||||||
Unit selling price | ||||||||||||
Unit variable costs | Value | |||||||||||
Unit contribution margin | ? | |||||||||||
Fixed costs | Value | |||||||||||
Unit contribution margin | Value | |||||||||||
Break-even point in units | ? | |||||||||||
(b)(2) | Break-even point in dollars | |||||||||||
Break-even point in units | Value | |||||||||||
Unit selling price | Value | |||||||||||
Break-even point in dollars | ? | |||||||||||
(c ) | Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full percent.) | |||||||||||
Contribution margin ratio | ||||||||||||
Unit contribution margin | Value | |||||||||||
Unit selling price | Value | |||||||||||
Contribution margin ratio | ? | |||||||||||
Margin of safety ratio | ||||||||||||
Total sales | Value | |||||||||||
Break-even sales | Value | |||||||||||
Margin of safety (dollars) | Value | |||||||||||
Total sales | Value | |||||||||||
Margin of safety ratio | Value | |||||||||||
(d) | Determine the sales dollars required to earn net income of $180,000. | |||||||||||
Sales dollars required to earn target income | ||||||||||||
Fixed costs | Value | |||||||||||
Target income | Value | |||||||||||
Total fixed cost + target income | ? | |||||||||||
Contribution margin ratio | ? | |||||||||||
Sales dollars required | ? | |||||||||||
After you have completed P18-3A, consider the following additional question | ||||||||||||
Assume that the unit selling price per bottle changed to $0.60 each, and fixed manufacturing costs | ||||||||||||
increased to $300,000. Show impact of these changes on calculations. | ||||||||||||
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