For the Year Ending December 31, 2012 $ Lyman bottles and distributes Livit, a d

Question

For the Year Ending December 31, 2012

$

Lyman bottles and distributes Livit, a diet soft drink. The beverage is sold for 68 cents per 16-ounce bottle to retailers, who charge customers 78 cents per bottle. For the year 2012, management estimates the following revenues and costs. Net sales $1,808,100 Selling expenses-variable $71,900 Direct materials 432,000 Selling expenses-fixed 69,300 Direct labor 356,400 Administrative expenses-variable 22,700 Manufacturing overhead-variable 324,300 Administrative expenses-fixed 62,100 Manufacturing overhead-fixed 287,300

Explanation / Answer

Hi,

Please find the answers as follows:

Part A:

Part B:

Part C:

Contribution Margin Ratio = 600800/1808100 = 33.23%

Margin of Safety Ratio = (1808100 - 1260072)/1808100*100 = 30.31%

Part D:

Required Sales = (240000 + 418700)/.3323 = 1982245

Thanks.

Net sales
1808100 Variable expenses

Cost of Goods Sold 1112700
Selling expenses - Variable 71900
Administrative expenses - Variable 22700
Total variable expenses
1207300 Contribution margin
600800 Fixed expenses

Manufacturing overhead - Fixed 287300
Selling expenses - Fixed 69300
Administrative expenses - Fixed 62100
Total fixed expenses
418700 Net income
182100

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