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Ivanhoe 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   $1,950,000   Selling expenses—variable   $171,000 Direct materials   470,000   Selling expenses—fixed   59,000 Direct labor   340,000   Administrative expenses—variable   24,000 Manufacturing overhead—variable   360,000   Administrative expenses—fixed   120,500 Manufacturing overhead—fixed   230,000   Prepare a CVP income statement for 2020 based on management’s estimates.   Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.) Contribution margin ratio             % Margin of safety ratio             %     Determine the sales dollars required to earn net income of $210,000. (Round answer to 0 decimal places, e.g. 1,225.) Required sales dollars   $

Ivanhoe 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   $1,950,000   Selling expenses—variable   $171,000 Direct materials   470,000   Selling expenses—fixed   59,000 Direct labor   340,000   Administrative expenses—variable   24,000 Manufacturing overhead—variable   360,000   Administrative expenses—fixed   120,500 Manufacturing overhead—fixed   230,000   Prepare a CVP income statement for 2020 based on management’s estimates.   Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.) Contribution margin ratio             % Margin of safety ratio             %     Determine the sales dollars required to earn net income of $210,000. (Round answer to 0 decimal places, e.g. 1,225.) Required sales dollars   $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ivanhoe 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
   $1,950,000  
Selling expenses—variable
   $171,000
Direct materials
   470,000  
Selling expenses—fixed
   59,000
Direct labor
   340,000  
Administrative expenses—variable
   24,000
Manufacturing overhead—variable
   360,000  
Administrative expenses—fixed
   120,500
Manufacturing overhead—fixed
   230,000  

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

 

Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 3 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.)

Contribution margin ratio
             %
Margin of safety ratio
             %
 
 
Determine the sales dollars required to earn net income of $210,000. (Round answer to 0 decimal places, e.g. 1,225.)

Required sales dollars  
$
 
Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.) Variable cost per bottle Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.) (1) Compute the break-even point units (2) Compute the break-even point $ %24
Transcribed Image Text:Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, e.g. 0.251.) Variable cost per bottle Compute the break-even point in (1) units and (2) dollars. (Round answers to 0 decimal places, e.g. 1,225.) (1) Compute the break-even point units (2) Compute the break-even point $ %24
%24 %24 %24
Transcribed Image Text:%24 %24 %24
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