jorge company bottles and distributes b-lite, a diet soft drink.

P5-2A Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for $0.50 per 16-ounce bottle to retailers, who charge customers $0.75 per bottle. For the year 2014, management estimates the following revenues and costs:

Net sales	$1,800,000	Selling expenses – Variable	$70,000
Direct materials	430,000	Selling expenses – Fixed	65,000
Direct labor	360,000	Administrative expenses – Variable	20,000
Manufacturing overhead – Variable	380,000	Administrative expenses – Fixed	60,000
Manufacturing overhead – Fixed	280,000

Instructions
(a) Prepare a CVP income statement for 2014 based on management’s estimates.
(b) Compute the break-even point in (1) units and (2) dollars.
(c) Compute the contribution margin ratio and the margin of safety ratio.