Carla Vista Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold...
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Accounting
Carla Vista Company bottles and distributes B-Lite, a diet 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
$2,000,000
Selling expensesvariable
$109,000
Direct materials
550,000
Selling expensesfixed
58,000
Direct labor
400,000
Administrative expensesvariable
21,000
Manufacturing overheadvariable
420,000
Administrative expensesfixed
52,000
Manufacturing overheadfixed
190,000
Prepare a CVP income statement for 2020 based on managements estimates.
Calculate variable cost per bottle.
Compute the break-even point in (1) units and (2) dollars.
Compute the contribution margin ratio and the margin of safety ratio.
Determine the sales dollars required to earn net income of $190,000.
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