Question
Sales P5-2B All Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to
Sales P5-2B All Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bot- tle. For the year 2017, management estimates the following revenues and costs. $2,500,000 Selling expenses-variable $ 80,000 Selling expenses-fixed 250,000 Administrative expenses- Direct materials 360,000 Direct labor 450,000 Manufacturing overhead- variable 40,000 variable 270,000 Administrative expenses Manufacturing overhead- fixed 150,000 fixed 380,000 Instructions (a) Prepare a CVP income statement for 2017 based on management's estimates. (Show column for total amounts only.) (b) Compute the break-even point in (1) units and (2) dollars. (e) Compute the contribution margin ratio.
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