Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 1-liter bottle to retailers, who charge customers 75 cents per bottle. For the year 2020, management estimates the following revenues and costs.

Instructions

a. Prepare a CVP income statement for 2020 based on management’s estimates. (Show column for total amounts only.)

b. Compute the break-even point in (1) units and (2) sales.

c. Compute the contribution margin ratio and the margin of safety ratio. (Round to nearest full percent.)

d. Determine the sales dollars required to earn net income of $180,000.

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Sales Direct materials Direct labor Manufacturing overhead- Selling expenses-variable Selling expenses-fixed Administrative expenses- variable Administrative expenses- fixed $1,800,000 430,000 $70,000 65,000 360,000 20,000 variable 380,000 Manufacturing overhead- 60,000 fixed 280,000