P18.3A (LO 3, 4, 5), AN Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is
sold for 50 cents per 16-ounce bottle to retailers. For the year 2022, 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-
Manufacturing overhead-
variable
20,000
variable
380,000
Administrative expenses-
Manufacturing overhead-
fixed
60,000
fixed
280,000
Instructions
a. Prepare a CVP income statement for 2022 based on management's estimates. (Show column for total
amounts only.)
b. Compute the break-even point in (1) units and (2) dollars.
c. Compute the contribution margin ratio and the margin of safety ratio. (Round to nearest full percent.)
d. Determine the sales dollars required to earn net income of $180,000.