Reference no: EM132884303
Question - Sandhill Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 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 $1,800,000
Selling expenses-variable $87,000
Direct materials 420,000
Selling expenses-fixed 61,000
Direct labor 400,000
Administrative expenses-variable 23,000
Manufacturing overhead-variable 420,000
Administrative expenses-fixed 99,000
Manufacturing overhead-fixed 110,000
Required -
A) CVP income statement for 2020 based on management's estimates.
B) Calculate variable cost per bottle.
C) Compute the break-even point in (1) units and (2) dollars.
D) Compute the contribution margin ratio and the margin of safety ratio.
E) Determine the sales dollars required to earn net income of $190,000.