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Question #1 Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income DrinkMe
Question #1 Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income DrinkMe 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 $1,800,000 Direct materials 430,000 Selling expenses - variable Selling expenses - fixed $70,000 65,000 Direct labor 360,000 Manufacturing overhead- variable 380,000 Administrative expenses variable Administrative expenses - fixed 20,000 60,000 Manufacturing overhead -fixed 280,000 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. (a)
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