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Tasty Drinks company bottles and distributes Kola-L soft drink. This product is being sold for 55 cents per 16-ounce bottle to retailers who charge customers
Tasty Drinks company bottles and distributes Kola-L soft drink. This product is being sold for 55 cents per 16-ounce bottle to retailers who charge customers 80 cents per bottle. For the year 2010, management team estimates the following revenue and costs: Sales $1,900,000 $72,000 Selling expenses-variable Direct Materials $ 445,000 $67,000 Selling expenses-fixed Direct Labour $ 371,000 $21,000 Administration expenses-variable Manufacturing overhead-variable $ 390,000 $62,000 Administration expenses-fixed Manufacturing overhead-fixed $ 286,000 Required: a) Prepare a CVP income statement for 2018 based on management team's estimates. (4 marks) b) Compute the break-even point in (1) units and (2) sales dollars. (3 marks) C) ) Compute contribution margin ratio and the margin of safety ratio. (2 marks) d) Determine the sales dollars required to earn net income of $185,000. (1 mark)
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