Question: P5-2A 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
| P5-2A 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 | ||||||||||||
| to retailers, who charge customers 75 cents per bottle. For the year 2017, management estimates the following revenues | ||||||||||||
| and costs. | ||||||||||||
| Sales | $1,800,000 | Selling expenses - variable | $70,000 | |||||||||
| Direct materials | 430,000 | Selling expenses - fixed | 65,000 | |||||||||
| Direct labor | 360,000 | Administrative expenses - variable | 20,000 | |||||||||
| Manufacturing overhead- variable | 380,000 | Administrative expenses - fixed | 60,000 | |||||||||
| Manufacturing overhead -fixed | 280,000 | |||||||||||
| Instructions | ||||||||||||
| (a) | Prepare a CVP income statement for 2017 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 $180,000. | |||||||||||
| NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | ||||||||||||
| (a) | Prepare a CVP income statement for 2017 based on management estimates. (show column for total amounts only.) | |||||||||||
| JORGE COMPANY | ||||||||||||
| CVP Income Statement (Estimated) | ||||||||||||
| For the Year Ending December 31, 2017 | ||||||||||||
| Sales | Value | |||||||||||
| Variable expenses | ||||||||||||
| Cost of goods sold | ? | |||||||||||
| Selling expenses | Value | |||||||||||
| Administrative expenses | Value | |||||||||||
| Total variable expenses | ? | |||||||||||
| Contribution margin | ? | |||||||||||
| Fixed expenses | ||||||||||||
| Cost of goods sold | Value | |||||||||||
| Selling expenses | Value | |||||||||||
| Administrative expenses | Value | |||||||||||
| Total fixed expenses | ? | |||||||||||
| Net income | ? | |||||||||||
| (b) | Compute the break-even point in (1) units and (2) dollars. | |||||||||||
| (b)(1) | Break-even point in units | |||||||||||
| Unit selling price | Value | |||||||||||
| Unit variable costs | Value | |||||||||||
| Unit contribution margin | ? | |||||||||||
| Fixed costs | Value | |||||||||||
| Unit contribution margin | Value | |||||||||||
| Break-even point in units | ? | |||||||||||
| (b)(2) | Break-even point in dollars | |||||||||||
| Break-even point in units | Value | |||||||||||
| Unit selling price | Value | |||||||||||
| Break-even point in dollars | ? | |||||||||||
| (c ) | Compute the contribution margin ratio and the margin of safety ratio. (Round to the nearest full percent.) | |||||||||||
| Contribution margin ratio | ||||||||||||
| Unit contribution margin | Value | |||||||||||
| Unit selling price | Value | |||||||||||
| Contribution margin ratio | ? | |||||||||||
| Margin of safety ratio | ||||||||||||
| Total sales | Value | |||||||||||
| Break-even sales | Value | |||||||||||
| Margin of safety (dollars) | Value | |||||||||||
| Total sales | Value | |||||||||||
| Margin of safety ratio | Value | |||||||||||
| (d) | Determine the sales dollars required to earn net income of $180,000. | |||||||||||
| Sales dollars required to earn target income | ||||||||||||
| Fixed costs | Value | |||||||||||
| Target income | Value | |||||||||||
| Total fixed cost + target income | ? | |||||||||||
| Contribution margin ratio | ? | |||||||||||
| Sales dollars required | ? | |||||||||||
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