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