Best Harmonica Company manufactures and sells harmonicas to distributors. The model they produce sells to the distributors for $8.00 each. Following are cost estimates:

Sales………………………………………………………………….$3,480,000

Direct materials………………………………………………………….543,750

Direct labor……………………………………………………………...761,250

Manufacturing overhead–variable………………………………………152,250

Manufacturing overhead–fixed…………………………………………640,000

Selling expenses–variable………………………………………………...78,300

Selling expenses–fixed………………………………………………….300,000

Administrative expenses–variable………………………………………..47,850

Administrative expenses–fixed…………………………………………185,000

Instructions

A. Prepare a CVP income statement based on these cost estimates.

B. Commute contribution margin ratio.

C. Compute the break-even point in (1) units and (2) dollars.

D. Compute the margin of safety ratio.

E. Determine the sales dollars required to earn net income of $1,000,000.

Answer rating: 100% (QA)

A CVP Income statement Sales 3480000 Less Variable costs Direct Material 543750 Direct ... View the full answer