P5-2A Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...

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P5-2A 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 2014,...

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P5-2A 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 2014, 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—

Manufacturing overhead— variable 20,000 variable 380,000 Administrative expenses—

Manufacturing overhead— fixed 60,000 fixed 280,000

Instructions

(a) Prepare a CVP income statement for 2014 based on management’s 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 nearest full percent.)

(d) Determine the sales dollars required to earn net income of $180,000.

Answered Same Day Dec 25, 2021

Robert · Accepted Answer

SOLUTION:
a)  Sales 
     
 $       1,800,000
Variable expenses
     Cost of goods sold
 $       1,170,000
      Selling expenses
 $            70,000
      Administrative expenses  $            20,000
           Total variable expenses
 $       1,260,000
Contribution margin
 $          540,000
Fixed expenses
     Cost of goods sold
 $          280,000
     Selling expenses
 $            65,

P5-2A 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 2014,...

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