Reference no: EM132504459
Question - Crane 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 2020, management estimates the following revenues and costs.
Sales $1,750,000
Selling expenses-variable $96,500
Direct materials 450,000
Selling expenses-fixed 63,000
Direct labor 360,000
Administrative expenses-variable 26,000
Manufacturing overhead-variable 380,000
Administrative expenses-fixed 69,500
Manufacturing overhead-fixed 130,000
Required -
Create CVP income statement for 2020 based on management's estimates.
Calculate variable cost per bottle.
Compute the break-even point in (1) units and (2) dollars.
Compute the contribution margin ratio and the margin of safety ratio.
Determine the sales dollars required to earn net income of $220,000.
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