No resultsOptions v Return to Blackboard Hele I S roblem 5-2A rge Company bottle

Question

No resultsOptions v Return to Blackboard Hele I S roblem 5-2A rge Company bottles and distrbutes B-ute, a diet soft drink. The beverage is sole for s0 cents per 16-ounce bottie to retaiers, who charge customers 90 cents per bottle. For the year 2017, management ollowing revenues and costs. $2,052,000 Selling expenses-variable 400,000 Selling expenses-tixed $60,000 Sales Direct materials Darect labor Manufactiuring overhead-vartable 83,800 58,000 500.000 Adminiserative expenses-varabtle 430,000 Administrative expenses-fed 39,300 Prepare a cvp income statement for 2017 based on management's estimates 612201

Explanation / Answer

Part 1

JORGE COMPANY

CVP Income Statement (Estimated)

For the Year Ending December 31, 2017

Cost of goods sold (variable) = Direct materials $460,000 + direct labor $300,000 + variable manufacturing overhead $430,000 = 1190000

Part 2

Variable cost = total variable costs / sales = 1333800/2052000 = 65% of sales

Therefore, variable cost per bottle = 0.60*65% = 0.390

Part 3

Breakeven point in units = fixed costs / contribution margin Per unit

Contribution margin Per unit = selling price per unit - variable cost per unit = 0.60-0.39=0.21

Breakeven point in units = 657300/0.21=3130000 units

Breakeven in dollars = 3130000*0.60 =$1878000

Part 4

Contribution margin ratio = contribution margin Per unit / selling price per unit = 0.21/0.60 = 35%

Margin of safety ratio =(sales - breakeven sales in dollars) /sales = (2052000-1878000)/2052000 = 8.48% =8%

Part 5

Required sales = (657300+32200)/0.21 =3283333 units

Sales 2052000 Variable expenses Cost of goods sold 1190000 Selling expenses 60000 Administrative expenses 83800 Total variable expenses 1333800 Contribution margin 718200 Fixed expenses Cost of goods sold 539300 Selling expenses 60000 Administrative expenses 58000 Total fixed expenses 657300 Net income 60900

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.