Reference no: EM13604693

Lorge Company bottles and distributes Livit, 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 2011, management estimates the following revenues and costs. Net sales $1,800,000 Selling expenses-variable $70,000 Direct materials 430,000 Selling expenses-fixed 65,000 Direct labor 352,000 Administrative expenses-variable 20,000 Manufacturing overhead-variable 316,000 Administrative expenses-fixed 60,000 Manufacturing overhead-fixed 283,000 Prepare a CVP income statement for 2011 based on management's estimates. (List amounts from largest to smallest e.g. 10, 5, 3, 2. Enter all amounts as positive amounts and subtract where necessary.) LORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2011 Net sales 1,800,000 Varible Expenses Cost of goods sold 1,098,000 Selling expenses 70,000 Administrative expenses 20,000 Total variable expenses 1,188,000 Contribution margin 612,000 Fixed expenses Cost of goods sold 283,000 Selling expenses 65,000 Administrative expenses 60,000 Total fixed expenses 408,000 Net income 204,000 Compute the break-even point in (1) units and (2) dollars. (Round unit price to 2 decimal places, e.g. 10.50, and all ratios and final answers to 0 decimal places, e.g. 125.) Breakeven point in units 2,400,000 units Breakeven point in dollars 1,200,000 $ Compute the contribution margin ratio and the margin of safety ratio. (Round answers to 0 decimal places, e.g. 125.) Contribution margin ratio 34 % Margin of safety ratio 33% Determine the sales dollars required to earn net income of $238,000.