Question

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

Answer 1

1550000 Required: A Crane Company CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales Variable expenses: Cost of goods sold 1140000 Selling expenses 72000 Administrative expenses 28000 Total Variable expenses Contribution margin Fixed expenses: Cost of goods sold 100000 Selling expenses 53000 Administrative expenses 48500 Total Fixed expenses Net Income 1240000 310000 2015001 108500 Required: B Variable cost per bottel percentage = (Total variable cost/ Sales ) *100 Total Vaiable cost 1240000 Sales 1550000 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 201500 Contribution margin perunit 0.10 Break even point units 2015000 units Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 201500 Contribution margin ratio 0.20 Break even point Dollars 1007500 Dollars Required: C 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 542500 Actual sales 1550000 Margin safety ratio 35 % Required: D Required sales dollars = (Fixed cost + Required Income)/Contribution margin ratio Fixed cost 201500 Required Income 180000 Contribution margin ratio 20% Required sales dollars 1907500