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P5-2B All Frute Company bottles and distributes Frute Ade

Price: $2.50


P5-2B All Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage
is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per
bottle. For the year 2014, management estimates the following revenues and costs.


Instructions
(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.
(d) Determine the sales dollars required to earn net income of $624,000.

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