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P5-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...

P5-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio
   and sales for target net income
Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle
to retailers. 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
Instructions
(a) Prepare a CVP income statement for 2020 based on management estimates. (show column for total amounts only.)
(b) Compute the break-even point in (1) units and (2) dollars.
(c ) Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full percent.)
(d) Determine the sales dollars required to earn net income of $180,000.

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Expert Solution

ekkarill92 answered 1 year ago
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