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 75 cents per bottle. For the year 2020, management estimates the following revenues and costs.

Sales		$1,980,000		Selling expenses—variable		$79,000
Direct materials		500,000		Selling expenses—fixed		56,000
Direct labor		380,000		Administrative expenses—variable		27,000
Manufacturing overhead—variable		400,000		Administrative expenses—fixed		179,500
Manufacturing overhead—fixed		210,000

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

$

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

$

Answer 1

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.