Problem 5-2A (Part Level Submission) (a) Problem 5-2A (Part Level Submission) Jo
ID: 356896 • Letter: P
Question
Problem 5-2A (Part Level Submission)
(a)
Problem 5-2A (Part Level Submission)
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 2017, management estimates the following revenues and costs.Sales $1,840,000 Selling expenses—variable $50,000 Direct materials 440,000 Selling expenses—fixed 50,000 Direct labor 320,000 Administrative expenses—variable 36,000 Manufacturing overhead—variable 350,000 Administrative expenses—fixed 54,000 Manufacturing overhead—fixed 498,000
Explanation / Answer
Jorge Company
CVP Income Statement (Estimated)
For the Year 2017
Particular
Amount ($)
Amount ($)
Sales
1,840,000
Variable expenses
1.Cost of goods sold(calculated below)
2. Selling expenses
3. Administrative expenses
Total variable expenses (1+2+3)
498,000
50,000
36,000
1,196,000(Total)
Contribution margin(sales-variable expenses)
644,000
Fixed expenses
1.Cost of goods sold(Fixed Manufacturing overhead)
2.Selling expenses
3.Administrative expenses
Total Fixed expenses(1+2+3)
498,000
50,000
54,000
602,000 (Total)
Net income (Contribution margin –Total fixed expenses)
42,000
Cost of goods sold = Direct materials + Direct labor + Variable manufacturing overhead
= 440,000+ 320,000+ 350,000
= 1,110,000
Particular
Amount ($)
Amount ($)
Sales
1,840,000
Variable expenses
1.Cost of goods sold(calculated below)
2. Selling expenses
3. Administrative expenses
Total variable expenses (1+2+3)
498,000
50,000
36,000
1,196,000(Total)
Contribution margin(sales-variable expenses)
644,000
Fixed expenses
1.Cost of goods sold(Fixed Manufacturing overhead)
2.Selling expenses
3.Administrative expenses
Total Fixed expenses(1+2+3)
498,000
50,000
54,000
602,000 (Total)
Net income (Contribution margin –Total fixed expenses)
42,000
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