Question

Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 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		$1,800,000		Selling expenses—variable		$70,000
Direct materials		430,000		Selling expenses—fixed		65,000
Direct labor		360,000		Administrative expenses—variable		20,000
Manufacturing overhead—variable		380,000		Administrative expenses—fixed		60,000
Manufacturing overhead—fixed		280,000

Prepare a CVP income statement for 2020 based on management’s estimates.

  

Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.)

Variable cost per bottle

$enter Variable cost per bottle in dollars rounded to 3 decimal places

  

  

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 rounded to 0 decimal places	units
(2)		Compute the break-even point		$enter a dollar amount rounded to 0 decimal places

  

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 $180,000. (Round answer to 0 decimal places, e.g. 1,225.)

Required sales dollars

$enter the Required sales dollars rounded to 0 decimal places

Answer 1