Project 1: CVP Income Statement (10 points) Upload your file to Moodle by the de
ID: 2334096 • Letter: P
Question
Project 1: CVP Income Statement (10 points) Upload your file to Moodle by the deadline specified. Do NOT email your file Sassy Sauces is a company owned by Carla Fernandez. Carla loves to make various salsas. jellies and other condiments for her friends. They have become so popular with friends and family that they have encouraged her to start her own company to sell these products. Using the skills that you have learned in this class, help Carla prepare her break-even analysis to present to the bank for financing her business. The costs to produce the salsa include the following: Monthly depreciation expense on food processing equipment Jars and labels Commission paid to stores that sell the product Monthly cost of leasing the factory to produce the sauces Direct Labor Direct Materials Marketing, website, telephone and other monthly fixed costs Variable manufacturing costs Officer's salary $1,250 $.60 jar $.75/ jar $2,500 $2.00 /jar $1.00/jar $1,000 $1.65/jar $2,000 During the first month of operations, Sassy Sauces plans to manufacture and sell 10,000 jars of salsa. The salsa will sell for $7.50 per jar. Requirements- Using Excel, prepare the following: 1. A traditional (functional) income statement. 2. A CVP income statement. 3. Calculate break-even in units and in sales dollars. 4. Calculate sales (in units and in dollars) needed to target a net income of $15,000. Instructions: 1. Use formulas! Make sure to link the information between statements. Label workshees. 2. Be sure to label your answers. Don't assume that your instructor will "know what you meant."Explanation / Answer
Solution 1:
Solution 2:
Solution 3:
Breakeven point in units = Fixed cost / contribution margin per unit = $6,750 / $1.50 = 4500 units
Breakeven point in sales dollar = Breakeven point in units * Selling price
= 4500 * $7.50 = $33,750
Solution 4:
Units sales need to acheived target operating income = (Fixed cost + Target income) / contribution margin per unit
= ($6,750 + $15,000) / $1.50 = 14500 units
Dollar sales needed to achieve target operating income = target units * selling price
= 14500 * $7.50 = $108,750
Traditional income statement - Sassy Sauces Particulars Amount Sales (10000*$7.50) $75,000.00 Cost of goods manufactured and sold: Direct material (10000*$1) $10,000.00 Direct labor (10000*$2) $20,000.00 Variable manufacturing cost (10000*$1.65) $16,500.00 Jars and labels (10000*$0.60) $6,000.00 Depreciation - Food processing equipment $1,250.00 Leasing cost $2,500.00 Total cost of goods manufactured and sold $56,250.00 Gross Profit $18,750.00 Operating expenses: Commission (10000*$0.75) $7,500.00 Marketing, website, telephone and other monthly fixed costs $1,000.00 Office salary $2,000.00 Total operating expenses $10,500.00 Net Income $8,250.00Related Questions
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