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Compute the contribution margin ratio

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Reference no: EM131580866

Question - Jorge Company bottles and distributes B-Lite, a diet soft drinks. 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 $1,800,000 Selling expenses-variable $70,000

Direct Materials 430,000 Selling expenses-fixed 65,000

Direct labor 360,000 Administrative expenses variables 20,000

manufacturing overhead 380,000 Administrative expenses-fixed 60,000 variable

Manufacturing overhead 280,000 fixed

Instructions

(a) Prepare a CVP income statement for 2017 based on management's estimates. (Show column for total amounts only)

(b) Compute the break-even point in (1) units and (2) dollars

(c) Compute the contribution margin ratio and the margin of safety ratio. (Round the nearest full percent)

(d) Determine the sales dollars required to earn net income of $180,000.

Reference no: EM131580866

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