Question
ROMALY Company bottles and distributes Frapes, a flavored summer beverage. The beverage is sold for $1.50 per 8-ounce bottle to retailers. Management estimates the following
ROMALY Company bottles and distributes Frapes, a flavored summer 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 | $3,150,000 | Selling expenses-variable | $110,000 |
Direct materials | 600,000 | Selling expenses-fixed | 90,000 |
Direct labor | 500,000 | Administrative expenses-variable | 100,000 |
Manufacturing overhead-variable | 580,000 | Administrative expenses-fixed | 80,000 |
Manufacturing overhead-fixed | 310,000 |
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Instructions
How much is net income for the year using the CVP approach?
How much is the contribution margin ratio?
Compute the break-even point units and dollars.
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