Compute the contribution margin and fixed costs

Reference no: EM1354834

Tyson Company bottles and distributes LO-KAL, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bottle.

Management estimates the following revenues and costs.

Net sales $2,500,000 Selling expenses-variable $ 90,000
Direct materials 360,000 Selling expenses-fixed 200,000
Direct labor 650,000 Administrative expenses-
Manufacturing overhead- variable 30,000
variable 370,000 Administrative expenses-
Manufacturing overhead- fixed 140,000
fixed 260,000

Instructions
(a) Compute (1) the contribution margin and (2) the fixed costs.

(b) Compute the break-even point in (1) units and (2) dollars.

(d) Determine the sales dollars required to earn net income of $240,000.

Reference no: EM1354834

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