P5-3A 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. For the year 2020, management estimates the following revenues and costs. Sales Direct materials Direct labor Manufacturing overhead-variable Manufacturing overhead -fixed $1,800,000 430,000 360,000 380,000 280,000 Selling expenses - variable Selling expenses - fixed Administrative expenses - variable Administrative expenses - fixed $70,000 65,000 20,000 60,000 Instructions (a) Prepare a CVP income statement for 2020 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 2020 based on management estimates. (show column for total amounts only.) $1,800,000 JORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales Variable expenses Cost of goods sold $1,117,000 Selling expenses 70,000 Administrative expenses 20,000 Total variable expenses Contribution margin Fixed expenses Manufacturing overhead 280,000 Selling expenses 65,000 Administrative expenses 60,000 Total fixed expenses Net income 1,260,000 540,000 405,000 $135,000 (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 Unit contribution margin Value Value 2 Fixed costs Unit contribution margin Break-even point in units Value Value (b)(2) Break-even point in dollars Break-even point in units Unit selling price Break-even point in dollars Value Value (c) Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full perc Contribution margin ratio Unit contribution margin Unit selling price Contribution margin ratio Value Value Margin of safety ratio Total sales Break-even sales Margin of safety (dollars) Total sales Margin of safety ratio (%) Value Value Value Value 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 P5-3A, consider the following additional question 1. 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