Question
Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers
Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2020, management estimates the following revenues and costs.
Sales | $1,980,000 | Selling expensesvariable | $79,000 | |||
---|---|---|---|---|---|---|
Direct materials | 500,000 | Selling expensesfixed | 56,000 | |||
Direct labor | 380,000 | Administrative expensesvariable | 27,000 | |||
Manufacturing overheadvariable | 400,000 | Administrative expensesfixed | 179,500 | |||
Manufacturing overheadfixed | 210,000 |
Prepare a CVP income statement for 2020 based on managements estimates.
Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.)
Variable cost per bottle | $ |
Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.)
(1) | Compute the break-even point | enter a number of units | units | ||
---|---|---|---|---|---|
(2) | Compute the break-even point |
Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.)
Contribution margin ratio | enter percentages rounded to 0 decimal places | % | |
---|---|---|---|
Margin of safety ratio | enter percentages rounded to 0 decimal places | % |
Determine the sales dollars required to earn net income of $150,000. (Round answer to 0 decimal places, e.g. 1,225.)
Required sales dollars | $ |
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