Williams Company bottles and distributes Supe Juice, a 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: $1,800,000                    Selling expenses—variable: $70,000 Direct materials: 430,000                   Selling expenses—fixed: 65,000 Direct labor: 360,000              Administrative expenses—variable: 20,000 Manufacturing overhead—variable: 380,000             Administrative expenses—fixed: 60,000 Manufacturing overhead—fixed: 280,000     Prepare a CVP income statement for 2020 based on management’s estimates.        Calculate variable cost per bottle. Compute the break-even point in units. Compute the break-even point in dollars. Compute the contribution margin ratio. Compute the margin of safety ratio. Determine the sales dollars required to earn net income of $180,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Williams Company bottles and distributes Supe Juice, a 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: $1,800,000                   

Selling expenses—variable: $70,000

Direct materials: 430,000                  

Selling expenses—fixed: 65,000

Direct labor: 360,000             

Administrative expenses—variable: 20,000

Manufacturing overhead—variable: 380,000            

Administrative expenses—fixed: 60,000

Manufacturing overhead—fixed: 280,000    

Prepare a CVP income statement for 2020 based on management’s estimates.       

Calculate variable cost per bottle.

Compute the break-even point in units.

Compute the break-even point in dollars.

Compute the contribution margin ratio.

Compute the margin of safety ratio.

Determine the sales dollars required to earn net income of $180,000.

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