Question

Blossom 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 $1,500,000 Selling expenses—variable $90,000 Direct materials 410,000 Selling expenses—fixed 50,000 Direct labor 330,000 Administrative expenses—variable 20,000 Manufacturing overhead—variable 350,000 Administrative expenses—fixed 40,000 Manufacturing overhead—fixed 150,000

Prepare a CVP income statement for 2020 based on management’s estimates. BLOSSOM COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 select an income statement item

			$enter a dollar amount
select an opening name for section one

select an income statement item

	$enter a dollar amount
select an income statement item

	enter a dollar amount
select an income statement item

	enter a dollar amount
select a closing name for section one

			enter a total amount for section one
select a summarirzing line for the first part

			enter a total amount for the first part
select an opening name for section two

select an income statement item

	enter a dollar amount
select an income statement item

	enter a dollar amount
select an income statement item

	enter a dollar amount
select a closing name for section two

			enter a total amount for section two
select a closing name for this statement

$enter a total net income or loss amount

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

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

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 %

Determine the sales dollars required to earn net income of $150,000. (Round answer to 0 decimal places, e.g. 1,225.) Required sales dollars

Answer 1

Required: A Blossom Company CVP Income Statement (Estimated) For the Year Ending December 31, 2020 1500000 Sales Variable expenses: 1090000 90000 20000 1200000 300000 Cost of goods sold Selling expenses Administrative expenses Total Variable expenses Contribution margin Fixed expenses: Cost of goods sold Selling expenses Administrative expenses Total Fixed expenses Net Income 150000 50000 40000 240000 60000

Required: B Variable cost per bottel percentage = (Total variable cost/Sales ) *100 Total Vaiable cost 1200000 Sales 1500000 Variable cost per bottel percentage 80 % Beverage sold for Variable cost per bottel percentage Variable cost per bottel 0.50 Cent per bottel 80% 0.400 per bottel Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 240000 Contribution margin perunit 0.10 Break even point units 2400000 units Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 240000 Contribution margin ratio 0.20 Break even point Dollars 1200000 Dollars

Required: Contribution margin ratio = Contribution margin / Sales Contribution margin 0.10 Sales 0.50 Contribtuion margin ratio - 20% Margin safety ratio = (Actual sales - Bep Sales) / actual sales Actual sales - Bep sales 300000 Actual sales 1500000 Margin safety ratio 20 % Required: D Required sales dollars = (Fixed cost + Required profit)/Contribution margin ratio Fixed cost 240000 Required profit 150000 Contribution margin ratio 0.20 Required sales dollars 1950000