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Cullumber Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to
CULLUMBER COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020
Calculate variable cost per bottle. (Round variable cost per bottle to 3 decimal places, es. 0.251.) Variable cost per bottle
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Answer #1

   CULLUMBER COMPANY              
CVP INCOME STATEMENT (ESTIMATED)                  
FOR THE YEAR ENDING DECEMBER 31,2020                  
   Amount in $)              
                  
Sales (A)   18,00,000              
                  
Direct Materials   5,10,000              
Direct Labour   3,90,000              
Manufacturing overheads (variable)   4,10,000              
Selling expenses (Variable)   1,05,000              
Administrative Expenses(variable)   25,000              
                  
Total Variable Cost (B)   14,40,000              
Contribution © (A-B)   3,60,000              
                  
Less: Fixed Expenses                  
Manufacturing overheads (Fixed)   1,30,000              
Selling expenses (Fixed)   62,000              
Administrative Expenses(Fixed)   96,000              
Total Fixed Expenses (D)   2,88,000              
                  
Total Profit E = (C-D)   72,000              
                  
                  
Selling Price per bottle   60 cents              
                  
Total Sales (in$)   18,00,000              
                  
No of bottles sold   1,800,000/.6              
=   30,00,000              
                  
Variable Cost per Bottle   14,40,000/3,000,000              
=   0.480   (in $)          
                  
Break-even point ( in Units)   Fixed Expenses/Contribution per unit              
                  
Contribution per unit   360,000/3,000,000              
=   0.120   (in $)          
                  
Break-even point ( in Units)   288000/0.12              
=   2400000              
                  
Break-even point ( in Dollars)   Fixed Expenses/Contribution ratio              
                  
Contribution ratio   Contribution/sales              
   360,000/1,800,000              
=   0.200              
                  
Break-even point ( in Dollars)   288000/0.2              
=   1440000   (in $)          
                  
                  
Contribution margin Ratio   Contribution/sales              
   360,000/1,800,000              
   0.200              
                  
Margin of safety ratio   Current Sales-Break-even point sales               *100
   Current Sale              
                  
   1,800,000-1440000       *100      
   18,00,000              
                  
   360,000/1,800,000*100              
   20.00%              
                  
Sales in Dollars reqd to earn net income of $170,000                  
                  
Net Income   1,70,000              
Add: Fixed Expenses   2,88,000              
Contribution   4,58,000              
Contribution ratio   0.20              
                  
Sales in Dollars reqd to earn net income of $170,000                  
=   458,000/0.20              
   2290000   (in $)          

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