Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P5-2A 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
P5-2A 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 | $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 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 | Value | |||||||||||
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 | ? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started