Reference no: EM132532542
Question - Garnet bottles and distributes 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 2016, 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
Required -
a. Compute the breakeven points in units and in dollars.
b. Compute the contribution margin ratio and the margin of safety ratio.
c. Determine the sales dollars required to earn net income of $180,000.