Problem 5-2A (Part Level Submission)

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		$1,870,000		Selling expensesvariable		$50,000
Direct materials		400,000		Selling expensesfixed		55,000
Direct labor		360,000		Administrative expensesvariable		49,000
Manufacturing overheadvariable		450,000		Administrative expensesfixed		52,000
Manufacturing overheadfixed		304,000

(a)

Prepare a CVP income statement for 2017 based on managements estimates.

JORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2017For the Month Ended December 31, 2017December 31, 2017
Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit				$
Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit
Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Expenses Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Expenses Gross Profit		$
Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Expenses Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Expenses Gross Profit
Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Expenses Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Expenses Gross Profit
Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Expenses Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Expenses Gross Profit
Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit 1) Calculate variable cost per bottle. (Round variable cost per bottle to 2 decimal places, e.g. 0.25. 2) Compute the break-even point in (1) units and (2) dollars.(Round answers to 0 decimal places, e.g. 1,225.) 3) Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 2 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.) 4) Determine the sales dollars required to earn net income of $240,910. (Round answers to 0 decimal places, e.g. 1,225.)