Question

Sheridan 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 $212,000 Direct materials $2,000,000 Selling expenses- variable 480,000 Selling expenses- fixed 330,000 Administrative expenses-variable 50,000 Direct labor Manufacturing overhead-variable Manufacturing overhead-fixed 28,000 90,000 350,000 Administrative expenses-fixed 280,000 Prepare a CVP income statement for 2020 based on management's estimates. SHERIDAN COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.) Variable cost per bottle Compute the break-even point in (1) units and (2) dollars. (Round answers to o decimal places, e.g. 1,225.) (1) Compute the break-even point units (2) Compute the break-even point 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 O decimal places, e.g. 25%.) Contribution margin ratio Margin of safety ratio Determine the sales dollars required to earn net income of $150,000. (Round answer to O decimal places, e.g. 1,225.) Required sales dollars

Answer 1

2000000 Required: A SHERIDAN COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales Variable expenses: Cost of goods sold 1160000 Selling expenses 212000 Administrative expenses 28000 Total Variable expenses Contribution margin Fixed expenses: Cost of goods sold 280000 Selling expenses 50000 Administrative expenses 90000 Total Fixed expenses Net Income 1400000 600000 420000 180000 Required: B Variable cost per bottel percentage = (Total variable cost/Sales) "100 Total Vaiable cost 1400000 Sales 2000000 Variable cost per bottel percentage 70%

Beverage sold for Variable cost per bottel percentage Variable cost per bottel 0.50 Cent per bottel 70% 0.350 per bottel Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 420000 Contribution margin perunit 0.15 Break even point units 2800000 units Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 420000 Contribution margin ratio Break even point Dollars 1400000 Dollars 0.30 Required: C Contribution margin ratio = Contribution margin / Sales Contribution margin 0.15 Sales 0.50 Contribtuion margin ratio 30 %

Margin safety ratio = (Actual sales - Bep Sales) / actual sales Actual sales - Bep sales 600000 Actual sales 2000000 Margin safety ratio 30 % Required: D Required sales dollars = (Fixed cost + Required Income)/Contribution margin ratio Fixed cost 420000 Required Income 150000 Contribution margin ratio 30% Required sales dollars 1900000