Jorge Company bottles and distributes B-lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 77cents per bottle. For the year 2014, management estimates the following revenues and costs.

Sales	$1,814,300	Selling expenses-Variable	$65,100
Direct materials	$426,800	Selling expenses-Fixed	$67,900
Direct labor	$358,000	Administrative expenses-Variable	$71,724
Manufacturing overhead-Variable	$312,100	Administrative expenses-Fixed	$63,800
Manufacturing overhead-Fixed	$293,000

Required:

a. Calculate variable cost per bottle.

b. Compute the break-even point in units and in dollars.

c. Compute the contribution margin ratio and margin of safety ratio.

d. Determine the sales dollars required to earn a net income of $241,000.

Target-Profit Points:

The target profit point of a company is a profit goal the company has, and to calculate the sales revenue necessary to achieve it, the contribution margin ratio and the total fixed costs must be used.

Answer rating: 100% (QA)

a We must calculate the total variable cost and then use the estimated number of bottles sold to cal... View the full answer