A) | Sheridan Company | ||||
CVP Income statement for 2020 in' $ | |||||
Total | Per unit | ||||
Sales | 20,00,000 | 0.500 | |||
Variable cost:- | Direct Material | 4,80,000 | |||
Direct Labour | 3,30,000 | ||||
Selling exp | 2,12,000 | ||||
Admini exp | 28,000 | ||||
Mfg overhead | 3,50,000 | 14,00,000 | 0.350 | ||
Contribution | 6,00,000 | 0.150 | |||
Fixed costs:- | Mfg overheads | 2,80,000 | |||
Selling exp | 50,000 | ||||
Adminis exp | 90,000 | 4,20,000 | 0.105 | ||
Income | 1,80,000 | 0.045 | |||
Selling price of beverage = 50 cents per 16 ounce bottle |
No of bottles sold = Sales/ price per bottle |
i.e. 2000000/.50 |
Variable cost per bottle is .35 cent per bottle as calculated in above table |
B) |
Breakeven point is the point where contribution is equals to the total fixed cost |
Break even point in units | i.e. Fixed costs/contribution per unit | i.e. 420000/.150 | 2800000 bottles |
C) | Break even point in Dollars | i.e. Sales at which contribution is eqauls to fixed costs | |||
i.e. .5*2800000 | 14,00,000 |
D) | Contribution margin ratio = Contribution/sales*100 | 30% |
Margin of safety =Margin of safety in dollars / Total budgeted or actual sales | |||
Margin of safety = actual sales − Break even sales | |||
6,00,000 | |||
so, | 0.30 |
E) | Sales required to earn net income of $150000 | |||
Let no of sale unit be x | ||||
so, | 150000=0.15x-420000 | |||
x= (420000+150000)/.15 | ||||
38,00,000 | ||||
So sales = 3800000*.50 | 19,00,000 |
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