P$22\mathrm{.}3$A Prepare a CVP income statement, compute break$-$even point, contribution margin ratio, margin of safety ratio

and sales for target net income

Jorge Company bottles and distributes B$-$Lite, a diet soft drink. The beverage is sold for $50$ cents per $16-$ounce bottle Price$/$drink $$0\mathrm{.}50$

to retailers. For the year $2020,$ management estimates the following revenues and costs. Unit sales $7,920,000$

Target Net $$396,000$

Sales $$3,960,000$ Selling expenses $-$ variable $$154,000$

Direct materials $$946,000$ Selling expenses $-$ fixed $$143,000$

Direct labor $$792,000$ Administrative expenses $-$ variable $$44,000$

Manufacturing overhead$-$ variable $$836,000$ Administrative expenses $-$ fixed $$132,000$

Manufacturing overhead $-$fixed $$616,000$

Instructions

$($a$)$ Prepare a CVP income statement for $2020$ based on management estimates. $($show column for total amounts only.$)$

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

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

$($d$)$ Determine the sales dollars required to earn net income of $$396,000$