Jorge
Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold
for $0.50 per 16-ounce bottle to retailers, who charge customers
P5-2A Jorge
Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold
for $0.50 per 16-ounce bottle to retailers, who charge customers $0.75 per
bottle. For the year 2014, 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
|
360,000
|
Administrative expenses - Variable
|
20,000
|
|
Manufacturing overhead - Variable
|
380,000
|
Administrative expenses - Fixed
|
60,000
|
|
Manufacturing overhead - Fixed
|
280,000
|
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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
|
JORGE COMPANY
|
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CVP Income Statement (Estimated)
|
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For the Year Ending December 31, 2014
|
||
|
Net sales
|
$1,800,000
|
|
|
Variable expenses
|
||
|
Cost of goods sold
|
$1,170,000
|
(1)
|
|
Selling expenses
|
70,000
|
|
