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P5-2A Jorge Company bottles and distributes B-Lite

Price: $2.50

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 2014, management estimates the following revenues and costs.

(a) Prepare a CVP income statement for 2014 based on management’s 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 nearest
full percent.)
(d) Determine the sales dollars required to earn net income of $180,000.

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