Utech 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 2008, 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 2008 basedon management's estimates. (List amounts from largest to smallesteg 10, 5, 3, 2.)
| UTECH COMPANY |
| CVP Income Statement(Estimated) |
|
For the YearEnding December 31, 2008
|
| Net sales |
$ 1,800,000 |
| Variable expenses |
| Cost of goodssold |
$ 1,098,000 |
| Sellingexpenses |
70,000 |
| Administrativeexpenses |
20,000
|
| Total variable expenses |
1,188,000
|
| Contribution margin |
612,000 |
| Fixed expenses |
| Cost of goodssold |
283,000 |
| Sellingexpenses |
65,000 |
| Administrativeexpenses |
60,000
|
| Total fixedexpenses |
408,000
|
| Net income |
$ 204,000
|
|
|
|
 |
Compute the break-even point in (1) units and(2) dollars. Compute the contribution margin ratio and the margin of safety ratio.