Question

In: Accounting

Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...

Sheridan 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 $2,000,000 Selling expenses—variable $212,000
Direct materials 480,000 Selling expenses—fixed 50,000
Direct labor 330,000 Administrative expenses—variable 28,000
Manufacturing overhead—variable 350,000 Administrative expenses—fixed 90,000
Manufacturing overhead—fixed 280,000

A)


Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.)

Solutions

Expert Solution

1. Break-even point in units = 2,800,000 bottles
2. Break-even point in dollars = $1,400,000


Explanation:

Variable cost per bottle percentage on sales = (Total variable cost / Total sales) × 100

Total variable costs = Direct materials + Direct labor + Manufacturing overhead-variable + Selling expense-variable + Administrative expense-variable = $480,000 + $330,000 + $350,000 + $212,000 + $28,000 = $1,400,000

Total sales = $2,000,000

Variable cost per bottle percentage = ($1,400,000 / $2,000,000) × 100 = 70%

Variable cost per bottle = 70% of selling price per bottle = 70% × 50 cent per bottle = 35 cent per bottle

Contribution margin per bottle = Selling price per bottle - Variable cost per bottle = .50 - .35 = .15 per bottle

Fixed cost = Manufacturing overhead-Fixed + Selling expense-Fixed + Administrative expense-Fixed = $280,000 + $50,000 + $90,000 = $420,000

1. Break-even point in units = Fixed cost / Contribution margin = $420,000 / .15 = 2,800,000 units

2. Break-even point in dollars = Fixed cost / Contribution margin ratio

Fixed cost = $420,000

Contribution margin ratio = Contribution margin per unit / Sales per unit = .15 / .50 = 0.30 = 30%

Break-even point in dollars = $420,000 / 30% = $1,400,000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60...
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...
Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60...
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. SHERIDAN COMPANY CVP...
Sheridan Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60...
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. SHERIDAN COMPANY CVP...
Monty Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
Monty 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 2017, management estimates the following revenues and costs. Sales $1,640,000 Selling expenses—variable $50,000 Direct materials 420,000 Selling expenses—fixed 70,000 Direct labor 350,000 Administrative expenses—variable 30,000 Manufacturing overhead—variable 380,000 Administrative expenses—fixed 48,000 Manufacturing overhead—fixed 208,250 1.Prepare a CVP income statement for 2017 based on management’s estimates. MONTY COMPANY CVP...
Blossom Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
Blossom 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 $1,950,000 Selling expenses—variable $67,000 Direct materials 550,000 Selling expenses—fixed 61,000 Direct labor 350,000 Administrative expenses—variable 28,000 Manufacturing overhead—variable 370,000 Administrative expenses—fixed 59,250 Manufacturing overhead—fixed 260,000 Correct answer iconYour answer is correct. Prepare a CVP income statement for 2020 based...
Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
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...
Wildhorse Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
Wildhorse 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 $1,750,000 Selling expenses—variable $108,000 Direct materials 450,000 Selling expenses—fixed 54,000 Direct labor 400,000 Administrative expenses—variable 22,000 Manufacturing overhead—variable 420,000 Administrative expenses—fixed 71,000 Manufacturing overhead—fixed 120,000 Compute the break-even point in (1) units and (2) dollars. (Round answers to 0...
Ivanhoe Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
Ivanhoe 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 $1,650,000 Selling expenses—variable $76,500 Direct materials 460,000 Selling expenses—fixed 51,000 Direct labor 330,000 Administrative expenses—variable 21,000 Manufacturing overhead—variable 350,000 Administrative expenses—fixed 99,000 Manufacturing overhead—fixed 180,000 Part 1 Partially correct answer iconYour answer is partially correct. Prepare a CVP income...
Cullumber Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
Cullumber 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 $1,750,000 Selling expenses—variable $113,000 Direct materials 460,000 Selling expenses—fixed 50,000 Direct labor 390,000 Administrative expenses—variable 27,000 Manufacturing overhead—variable 410,000 Administrative expenses—fixed 77,500 Manufacturing overhead—fixed 100,000 Prepare a CVP income statement for 2020 based on management’s estimates. CULLUMBER COMPANY CVP...
Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...
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 2017, management estimates the following revenues and costs. Sales $1,840,000 Selling expenses—variable $50,000 Direct materials 410,000 Selling expenses—fixed 45,000 Direct labor 350,000 Administrative expenses—variable 16,000 Manufacturing overhead—variable 370,000 Administrative expenses—fixed 60,000 Manufacturing overhead—fixed 365,750 A. Prepare a CVP income statement for 2017 based on management estimates. B. Calculate...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT