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Ripple Company bottles and distributes Ripple Fizz, a flavoured wine beverage. The beverage is sold for $1.50 per 8-ounce bottle to retailers. Management estimates the following revenues and costs at 100% of capacity.

Net sales

$30,00,000

Selling expensesvariable

$35,000

Direct materials

7,00,000

Selling expensesfixed

14,000

Direct labour

10,00,000

Administrative expensesvariable

15,000

Manufacturing overheadvariable

4,00,000

Administrative expensesfixed

30,000

Manufacturing overheadfixed

1,70,000

Instructions

a)

How much is net income for the year using the CVP approach? Present your answer in CVP income statement format.

b)

Calculate the break-even point units and dollars.

c)

How much is the contribution margin ratio?