Question

level), and it rises by 51.10por is, by choos rather an estimal discussion of reg s B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce diet Jorge Company bottles and distributes lers, who charge customers 75 cents per bottle. For the management e $1,800,000 Selling expenses -variable Sales Direct materials Direct labor Manufacturing overhead- variable 430,000 Selling expenses -fixed 360,000 Administrative expenses 380,000 Administrative expenses fixed 280,000 $70,000 65,000 20,000 60,000 Manufacturing overhead -fixed Instructions a) Prepare a CVP income statement b) Compute the break-even point in (1) units and (2) dollars. for 2017 based on management estimates. (show column for total amounts only.) tion margin ratio and the margin of safety ratio. (Round to the nearest full percent.) (c) Compute the contribut (d) Determine the sales dollars required to earn net income of $180,000. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" (a) Prepare a CVP income statement for 2017 based on management estimates. (show column for total amounts only) abor is JORGE COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2017 at fo Value,soo cco Sales Variable expenses Cost of goods sold Selling expenses Administrative expenses Value Value Total variable expenses Contribution margin Fixed expenses Value Cost of goods sold

Answer 1

Cost of Goods Sold
Particulars	Amount
A.Direct Materials	430000
B.Direct Labor	360000
Prime Cost (A+B)	790000
Add: Manufacturing Overheads	660000
Factory Cost	1450000
Add; Administrative Expenses	80000
Cost of Goods Sold	1530000
Add: Selling Expenses	135000
Cost of Sales	1665000

Break Even Point (in Units) = Fixed cost/Contribution per unit

Break Even Point (in Sales)=Break even point (in units )*selling price per unit

The margin of Safety=Budgeted sales -break-even sales

	Particulars	Amount in $	Amount in $
a	Sales in units		$        3,600,000
b	Selling price per Unit		$                     0.5
d	Revenues (Sales)		$        1,800,000
e	Less:Variable Costs
	Selling	(70,000)
	Administrative	(20,000)
	Total Variable Costs		$            (90,000)
f	Contribution (d-e)		$        1,710,000
g	Less:Fixed Cost
	Selling	(65,000)
	Administrative	(60,000)
	Total Fixed Cost		$         (125,000)
h	Net Income		$        1,585,000
i	Contribution per unit (f/a)		$                   0.48
j	Break Even Point ( in Units ) (g/i)		$            263,158
k	Break Even Point ( in Sales ) (j*B)		$            131,579
l	Margin of safety (in Sales) (d-k)		$        1,668,421

D.

By Cross multiplication Method
Particulars		Figures from Above	Required
Revenues (Sales)		$                  1,800,000	$        204,416
Net Income		$                  1,585,000	$        180,000

Therefore to get a net income of 180000 the sales will be 204416