Problem
Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 78 cents per bottle. For the year 2014, management estimates the following revenues and costs.(a) Prepare a CVP income statement for 2014 based on management's estimates.
|
Sales
|
$1,807,700
|
Selling expenses-variable
|
$68,000
|
|
Direct materials
|
429,500
|
Selling expenses-fixed
|
66,400
|
|
Direct labor
|
357,100
|
Administrative expenses-variable
|
24,782
|
|
Manufacturing overhead-variable
|
313,700
|
Administrative expenses-fixed
|
60,500
|
|
Manufacturing overhead-fixed
|
285,100
|
|
|
(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.