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P18-2A 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
P18-2A 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 2017, management estimates the following revenues | ||||||||
and costs. | ||||||||
Sales | $1,800,000 | Selling expenses - variable | ||||||
Direct materials | 430,000 | Selling expenses - fixed | ||||||
Direct labor | 360,000 | Administrative expenses - variable | ||||||
Manufacturing overhead- variable | 380,000 | Administrative expenses - fixed | ||||||
Manufacturing overhead -fixed | 280,000 | |||||||
Instructions | ||||||||
(a) | Prepare a CVP income statement for 2017 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 2017 based on management estimates. (show column for total amounts only.) | |||||||
JORGE COMPANY | ||||||||
CVP Income Statement (Estimated) | ||||||||
For the Year Ending December 31, 2017 | ||||||||
Sales | $ 1,800,000.00 | |||||||
Variable expenses | ||||||||
Cost of goods sold | ? | |||||||
Selling expenses | Value | |||||||
Administrative expenses | Value | |||||||
Total variable expenses | ? | |||||||
Contribution margin | ? | |||||||
Fixed expenses | ||||||||
Cost of goods sold | Value | |||||||
Selling expenses | Value | |||||||
Administrative expenses | Value | |||||||
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 | Value | |||||||
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 | ? | |||||||
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