All Frute
Company bottles and distributes Frute Ade, a fruit drink. The beverage is sold
for $0.50 per 16-ounce bottle to retailers
P5-2B All
Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage is
sold for $0.50 per 16-ounce bottle to retailers, who charge customers $0.70 per
bottle. For the year 2014, management estimates the following revenues and
costs:
Net sales
|
$2,500,000
|
Selling expenses - Variable
|
$80,000
|
Direct materials
|
360,000
|
Selling expenses - Fixed
|
250,000
|
Direct labor
|
450,000
|
Administrative expenses - Variable
|
40,000
|
Manufacturing overhead - Variable
|
270,000
|
Administrative expenses - Fixed
|
150,000
|
Manufacturing overhead - Fixed
|
380,000
|
||
Instructions:
(a) Prepare
a CVP income statement for 2014 based on management's estimates.
(b) Compute
the break-even point in (1) units and (2) dollars.
(c) Compute
the contribution margin ratio and the margin of safety ratio.
TUTORIAL
PREVIEW
(a) Prepare
a CVP income statement for 2014 based on management's estimates.
| ALL FRUTE COMPANY | ||||
| CVP Income Statement (Estimated) | ||||
| For the Year Ending December 31, 2014 | ||||
| Net sales | $2,500,000 | |||
| Variable expenses | ||||
| Cost of goods sold | $1,080,000 | (1) | ||
| Selling expenses | 80,000 | |||
File name: P5-2B All Frute.xls File type: .xls PRICE: $7
