Question

Blossom 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. 1,500,000 Selling expenses-variable 90,000 Sales Direct materials Direct labor Manufacturing overhead-variable Manufacturing overhead-fixed 410,000 Selling expenses-fixed 330,000 Administrative expenses-variable 20,000 350,000 Administrative expenses-fixed 150,000 50,000 40,000

Answer 1

	Blossom Company
	CVP Income Statement(Estimated)
Sales		1500000
Variable expenses:
Cost of goods sold	1090000		=410000+330000+350000
Selling expenses	90000
Administrative expenses	20000
Total Variable expenses		1200000
Contribution margin		300000
Fixed expenses:
Cost of goods sold	150000
Selling expenses	50000
Administrative expenses	40000
Total Fixed expenses		240000
Net income		60000
2
Variable cost per bottle	0.40		=1200000/3000000
3
(1) Break-even point	2400000	units	=240000/(0.5-0.4)
(2) Break-even point	1200000		=2400000*0.5
4
Contribution margin ratio	20%		=300000/1500000
Margin of safety ratio	20%		=(1500000-1200000)/1500000
5
Required sales dollars	1950000		=(240000+150000)/20%