Question

Problem 19-2A Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 90 cents per bottle. For the year 2017, management estimates the following revenues and costs. Sales Direct materials Direct labor Manufacturing overhead-variable Manufacturing overhead-fixed $ 2,052,000 460,000 300,000 430,000 539,300 Selling expenses-variable Selling expenses-fixed Administrative expenses-variable Administrative expenses-fixed $ 60,000 60,000 83,800 58,000

Answer 1

A)
	Sales					2,052,000
	Variable expenses
	cost of goods sold				1190000
	Selling expenses				60,000
	Administrative expense				83,800
	total variable expense					1,333,800
	Contribution margin					718,200
	fixed expenses
	cost of goods sold				539,300
	Selling expenses				60,000
	Administrative expense				58,000
	total fixed expense					657,300
	Net income					60,900
b-1)	Variable cost per bottle
	Number of bottles = 1,840,000/.50
			3420000
	1,333,800/3420000
	0.39	answer
b2)	Contribution margin per unit = 718200/3420000
				0.21
	Break even units = fixed cost/contribution margin per unit
			657300/.21
			3130000	units	answer
	Break even point dollars = 3130000*.6
			1878000	answer
c)	Contribution margin ration =			.21/.6
				0.35
				35%	answer
	margin of safety = actual sales - BEP sales
			2,052,000-1,878,000
			174,000
	margin of safety ratio = 174,000/2,052,000
			8%	answr
d)	Sales dollar required = ( fixed cost+target profit)/contribution margin ratio
			(657300+32200)/35%
			1970000	answer