Question

Sunland Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 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		$1,920,000		Selling expenses—variable		$147,000
Direct materials		410,000		Selling expenses—fixed		52,000
Direct labor		370,000		Administrative expenses—variable		27,000
Manufacturing overhead—variable		390,000		Administrative expenses—fixed		42,400
Manufacturing overhead—fixed		280,000

Prepare a CVP Income statement for 2020 based on management's estimates. SUNLAND COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales Variable Expenses - Cost of Goods Sold $ Selling Expenses - Administrative Expenses - Total Variable Expenses Contribution Margin Fixed Expenses Selling Expenses - Administrative Expenses - Total Fired Expenses Total Fed Expenses Net income-

Answer 1

1920000 Required: A Sunland Company CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales Variable expenses: Cost of goods sold 1170000 Selling expenses 147000 Administrative expenses 27000 Total Variable expenses Contribution margin Fixed expenses: Cost of goods sold 280000 Selling expenses 52000 Administrative expenses 42400 Total Fixed expenses Net Income 1344000 576000 3744001 201600

Required: B Variable cost per bottel percentage = (Total variable cost / Sales ) *100 Total Vaiable cost 1344000 Sales 1920000 Variable cost per bottel percentage 70% Beverage sold for Variable cost per bottel percentage Variable cost per bottel 0.60 Cent per bottel 70% 0.420 per bottel Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 374400 Contribution margin perunit 0.18 Break even point units 2080000 units Breakeven point units = Fixed cost / Contribution margin per unit Fixed cost 374400 Contribution margin ratio 0.30 Break even point Dollars 1248000 Dollars

Required: Contribution margin ratio = Contribution margin / Sales Contribution margin 0.18 Sales 0.60 Contribtuion margin ratio 30 % Margin safety ratio = (Actual sales - Bep Sales) / actual sales Actual sales - Bep sales 672000 Actual sales 1920000 Margin safety ratio 35 % Required:D Required sales dollars = (Fixed cost + Required Income)/Contribution margin ratio Fixed cost 374400 Required Income 180000 Contribution margin ratio 30% Required sales dollars 1848000