Project 1: CVP Income Statement
(10 points)
Instructions: Prepare your solutions in Excel, and upload your Excel file to Moodle by
the deadline specified by your instructor. Do NOT email your file!
The following information pertains to Fun in the Sun, Inc., a jet ski manufacturer:
Budgeted production costs for the coming year:
Direct materials per ski
Direct labor per ski
Variable overhead per ski
Total fixed overhead
$
575
280
70
44,850
Budgeted selling and administrative costs for the coming year:
Fixed selling & admin expense
$ 102,000
Sales commission per ski
75
In the coming year, Fun in the Sun plans to produce and
sell 710 skis at a price of $1,330 each.
Instructions for Project 1:
1. Prepare a CVP income statement.
2. Calculate the breakeven point in units and sales dollars.
3. Calculate the margin of safety.
4. Calculate the margin of safety ratio.
5. If Fun in the Sun wants to earn net income of $165,000, how many units must
it sell?