Question

Crane Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50...

Crane 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 2020, management estimates the following revenues and costs.

Sales $1,550,000 Selling expenses—variable $72,000
Direct materials 440,000 Selling expenses—fixed 53,000
Direct labor 340,000 Administrative expenses—variable 28,000
Manufacturing overhead—variable 360,000 Administrative expenses—fixed 48,500
Manufacturing overhead—fixed 100,000

Prepare a CVP income statement for 2020 based on management’s estimates.

CRANE COMPANY
CVP Income Statement (Estimated)

For the Year Ending December 31, 2020

select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

$enter a dollar amount

select an opening name for section one                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit
select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

$enter a dollar amount

select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a dollar amount

select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a dollar amount

select a closing name for section one                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a total amount for section one

select a summarirzing line for the first part                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a total amount for the first part

select an opening name for section two                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit
select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a dollar amount

select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a dollar amount

select an income statement item                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a dollar amount

select a closing name for section two                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

enter a total amount for section two

select a closing name for this statement                                                                      Administrative ExpensesContribution MarginCost of Goods SoldFixed ExpensesNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable ExpensesGross Profit

$enter a total net income or loss amount

eTextbook and Media

  

  

Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.)

Variable cost per bottle

$enter Variable cost per bottle in dollars rounded to 3 decimal places

eTextbook and Media

  

  

Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.)

(1) Compute the break-even point

enter the break-even point in units

units
(2) Compute the break-even point

$enter the break-even point in dollars

eTextbook and Media

  

  

Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.)

Contribution margin ratio

enter the contribution margin ratio in percentages rounded to 0 decimal places

%
Margin of safety ratio

enter the Margin of safety ratio in percentages rounded to 0 decimal places

%

eTextbook and Media

  

  

Determine the sales dollars required to earn net income of $180,000. (Round answer to 0 decimal places, e.g. 1,225.)

Required sales dollars

$enter the Required sales dollars

1 0
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Answer #1
A)
Sales 1,550,000
Variable expenses
cost of goods sold 1140000
Selling expenses 72,000
Administrative expense 28,000
total variable expense 1,240,000
Contribution margin 310,000
fixed expenses
cost of goods sold 100,000
Selling expenses 53,000
Administrative expense 48,500
total fixed expense 201,500
Net income 108,500
b-1) Variable cost per bottle
Number of bottles = 1,550,000/.50
3100000
1,240,000/3,100,000
0.4 answer
b2) Contribution margin per unit = 310,000/3,100,000
0.1
Break even units = fixed cost/contribution margin per unit
201,500/.1
2015000 units answer
Break even point dollars = 2015000*.5
1007500 answer
c) Contribution margin ration = .1/.5
0.2
20% answer
margin of safety = actual sales - BEP sales
1,550,000-1,007,500
542,500
margin of safety ratio = 542,500/1,550,000
35% answr
d) Sales dollar required = ( fixed cost+target profit)/contribution margin ratio
(201500+180000)/20%
1907500 answer
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