Margin Of Safety Ratio And Sales

P5-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio
and sales for target net income
Jorge 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 2017, 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
Instructions
(a) Prepare a CVP income statement for 2017 based on management 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 the nearest full percent.)
(d) Determine the sales dollars required to earn net income of $180,000.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

(a)

Prepare a CVP income statement for 2017 based on management estimates. (show column for total amounts only.)
JORGE COMPANY
CVP Income Statement (Estimated)
For the Year Ending December 31, 2017
Sales
Variable expenses
Cost of goods sold
Selling expenses
Administrative expenses
Total variable expenses
Contribution margin
Fixed expenses
Cost of goods sold
Selling expenses
Administrative expenses
Total fixed expensesP5-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio
and sales for target net income
Jorge 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 2017, 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
Instructions
(a) Prepare a CVP income statement for 2017 based on management 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 the nearest full percent.)
(d) Determine the sales dollars required to earn net income of $180,000.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

(a)

Prepare a CVP income statement for 2017 based on management estimates. (show column for total amounts only.)
JORGE COMPANY
CVP Income Statement (Estimated)
For the Year Ending December 31, 2017
Sales
Variable expenses
Cost of goods sold
Selling expenses
Administrative expenses
Total variable expenses
Contribution margin
Fixed expenses
Cost of goods sold
Selling expenses
Administrative expenses
Total fixed expenses