Ripple Company bottles and distributes Ripple Fizz, a flavoured wine beverage. The beverage is sold for $1.50 per 8 ounce bottle to retailers. Management estimates the following revenues and costs at 100% of capacity.

Net Sales $3,000,000

Selling expenses - variable $35,000

Direct materials $700,000

Selling expenses - fixed $14,000

Direct labour $1,000,000

Administrative expenses - variable $15,000

Manufacturing Overhead - variable $400,000

Administrative expenses - fixed $30,000

Manufacturing Overhead - fixed $170,000

Instructions

a)How much is net income for the year using the CVP approach? Present in CVP income statement format.7 marks

b)Calculate the break-even point units and dollars.5 marks

c)How much is the contribution margin ratio?2 marks