PRINTER VERSION BACK NEXT RCES ra Problem 19-2A (Part Level Submission) Jorge Co

Question

PRINTER VERSION BACK NEXT RCES ra Problem 19-2A (Part Level Submission) 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 Direct materials Direct labor Manufacturing overhead-variable Manufacturing overhead-fixed 50,000 50,000 36,000 54,000 $1,840,000 Sellng expenses-variable 40,000 Selling expenses-fixed 320,000 Administrative expenses-variable 50,000 Administrative expenses-fixed 498,000 tudy

Explanation / Answer

CVP INCOME STATEMENT $ Sales 1840000 Less : Variable Cost Materials 440000 Labour 320000 Manufacturing overhead variable 350000 Selling overhead variable 50000 Administrative overhead 36000 1196000 Contribution 644000 Less : Fixed Cost Manufacturing overhead fixed 498000 Selling overhead fixed 50000 Administrative fixed 54000 602000 Profit 42000 Number of bottle sold = 1840000 /.50 3680000 Bottle Variable Cost per Bottle = total variable cost / bottle sold 1196000/3680000 0.325 Break even point ( unit) = fixed cost / Contribution per unit 602000/0.175 3440000 Contribution per unit = total contriution / bottle sold 644000 / 3680000 0.175 BEP ( in $) = BEP unit * sales price 3440000 * .50 1720000 Income Satement Sales Less Variable cost Contribution Less Fixed Cost Profit Contribution = Fixed cost + profit 602000 + 54250 656250 Sales = Contribution / Contribution margin 656250 / 35*100 1875000 Contribution Margin ration = (Sales - variable cost) / sales *100 contribution /sales *100 644000/1840000*100 35% Margin of safty = sales - BEP sales 1840000 - 1720000 120000 Margin of safty ration = margin of safety / total sales *100 120000/1840000*100 6.52%

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