Solution-Calculate the net income for the year

Calculate the net income for the year

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Question - The company Wake Up manufactures and distributes a bottled coffee cold drink. The company has been in business for 5 years. The coffee beverage is sold for $1.50 per bottle to retailers across North America. When the company is operating at 100% capacity, the following revenues and costs are estimated as follows:

Net sales $3 Million

Selling expenses-variable $35,000

Direct materials 700,000

Selling expenses-fixed 14,000

Direct labour 1,000,000

Administrative expenses-variable 15,000

Manufacturing overhead-variable 400,000

Administrative expenses-fixed 30,000

Manufacturing overhead-fixed 170,000

Required -

a. Calculate the net income for the year using the Cost Volume Profit (CVP) approach? Present your answer in the CVP income statement format.

b. Calculate the break-even point in units and dollars.

c. How much is the contribution margin ratio.

d. Explain the benefit for the company in knowing the break-even point.

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Calculate the net income for the year

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Reference no: EM132859569

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