Question

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 2019, management estimates the following revenues and costs.

Sales $1,800,000 Selling expensesvariable $70,000

Direct materials 430,000 Selling expensesfixed 65,000

Direct labour 360,000 Administrative expenses variable 20,000

Manufacturing overhead

variable 380,000 Administrative expenses fixed 60,000

Manufacturing overhead

Fixed280,000

Instructions

(a)Calculate the CVP income statement for 2019 based on management's 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 nearest

full percent.)

(d) Determine the sales dollars required to earn net income of $180,000.