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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 ?

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