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 79 cents per bottle. For the year 2010, management estimates the following revenues and costs.
- Net sales $1,804,110 Selling expenses-variable $72,570
- Direct materials 425,563 Selling expenses-fixed 63,800
- Direct labor 351,120 Administrative expenses-variable 24,200
- Manufacturing overhead-variable 317,260 Administrative expenses-fixed 58,272
- Manufacturing overhead-fixed 285,180
- Compute the break-even point in (1) units and (2) dollars.
- Compute the contribution margin ratio and the margin of safety ratio.
- Determine the sales dollars required to earn net income of $236,600.