Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income

P5-2A 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, who charge customers 75 cents per bottle. For the year 2017, 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 2017 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.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio and sales for target net income

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