Question

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P22-28. Computea VP Incomea n t compute brak went contribution margir marginosyro and role for argetoet income All Frute Company bottles and distributes frute de fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers per bottle. For the year 2004, management estimate the following and costs. 250.000 Manufacturing overhead 380,000 fixed Seng expenses 250,000 Fixed 40,000 Variable 150,000 feed estructions: a) Prepare a CV income statement for 2014 based on management estimates (Show confortotal amounts only) Compute the break-even point in musi c ale Compute the contribution margin rutio and the margin of safety ratio (Round to nearest full perpent.) Idi termine the sales de roured to earn net income of SS4000 NOTE: Enter a number in cel requesting a value enter the a e r a formula in cells with ". ALL FRUTE COMPANY CVP Income Statement Estimated) Sales Revenue Variable Expenses Cost of Goods Sold Selling Expenses Administrative Expenses Total Variable Expenses Contribution Margin Fored Expenses Cost of Goods Sold Administrative Expenses Total Fixed Expenses Unit Selling Price Unit Variable costs Corto Mag per unit I LI Foxed Costs Contribution Margin per unit Break-even points) 123 1 Break-even point in its Un sing price Break-even point dollars Fixed Costs Contribution Margin Ratio Contribution main per Unit selling price Break-even point dollars Contribution Margin Ratio Contribution margin per Unitseling price Margin of Safety Ratio Break.even point (dollars) Crver break even Total despese Dewredne income Contribution margin ratio Required

Answer 1

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All Frute Company
Calculation of number of bottles sold			Note
Total Sales	2,500,000.00		A
Price per bottle	0.50		B
Number of bottles sold	5,000,000.00		C=A/B
Calculation of per unit data
Particulars	Amount	Per unit
Number of bottles sold	5,000,000.00		See C
Direct materials	160,000.00	0.032	This is Direct materials cost/ Number of bottles sold.
Direct Labor	450,000.00	0.09	This is Direct Labor cost/ Number of bottles sold.
Variable Manufacturing Overhead	270,000.00	0.054	This is Variable Manufacturing Overhead cost/ Number of bottles sold.
Variable Selling Expenses	80,000.00	0.016	This is Variable Selling Expenses/ Number of bottles sold.
Variable Admin Expenses	40,000.00	0.008	This is Variable Admin Expenses/ Number of bottles sold.
Total Variable Cost		0.20	D
Calculation of Cost of goods sold
Direct materials	160,000.00
Direct Labor	450,000.00
Variable Manufacturing Overhead	270,000.00
Cost of goods sold	880,000.00		E
Answer a
CVP Statement
Sales Revenue		2,500,000.00	See A
Variable Expenses
Cost of goods sold	880,000.00		See E
Selling Expenses	80,000.00
Admin Expenses	40,000.00
Total Variable Expenses		1,000,000.00	F
Contribution margin		1,500,000.00	G=A-F
Fixed Expenses
Cost of goods sold	180,000.00		This is Fixed Manufacturing Overhead.
Selling Expenses	250,000.00
Admin Expenses	150,000.00
Total Fixed Expenses		580,000.00	H
Net Income		920,000.00	I= G-H
Answer b (1)
Unit Selling Price	0.50		See B
Unit Variable Cost	0.20		See D
Contribution margin per unit	0.30		J=B-D
Fixed Costs	580,000.00		See G
Contribution margin per unit	0.30		See J
Breakeven point (units)	1,933,333.33		K=G/J
Answer b (2)
Breakeven point (units)	1,933,333.33		See K
Unit Selling Price	0.50		See B
Breakeven point ($)	966,666.67		L=K*B
Answer c
Contribution margin per unit	0.30		See J
Unit Selling Price	0.50		See B
Contribution margin ratio	60.00%		M= J/B
Total Sales	2,500,000.00		See A
Breakeven point ($)	966,666.67		See L
Excess over breakeven	1,533,333.33		M=A-L
Margin of safety ratio	61.33%		N=M/A
Answer d
Total Fixed Costs	580,000.00		See G
Desired Net Income	624,000.00		O
Desired Contribution	1,204,000.00		P=G+O
Contribution margin ratio	60.00%		See M
Sales ($) required	2,006,666.67		N=P/M
Note:
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