6-2A - 65,000 Administrative expenses.

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(a) TYSON COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2002 Net sales .......................................................................................... $1,800,000 Variable expenses Cost of goods sold. ....................................................................... $980,000 * Selling expenses. ......................................................................... 80,000 Administrative expenses. ............................................................. 20,000 Total variable expenses. .................................................. 1,080,000 Contribution margin. ................................................................................. 720,000 Fixed expenses Cost of goods sold. ....................................................................... 283,000 Selling expenses. .........................................................................
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Unformatted text preview: 65,000 Administrative expenses. ............................................................. 52,000 Total fixed expenses. ....................................................... 400,000 Net income .......................................................................................... $ 320,000 *Direct materials $400,000 + direct labor $280,000 + variable manufacturing overhead $300,000. (b) Variable costs = 60% of sales ($1,080,000 $1,800,000) or $.24 per bottle ($.40 X 60%). Total fixed costs = $400,000. (1) $.40X = $.24X + $400,000 $.16X = $400,000 X = 2,500,000 units (2) 2,500,000 X .40 = $1,000,000 (c) Contribution margin ratio = ($.40 $.24) $.40 = 40% Margin of safety ratio = ($1,800,000 $1,000,000) $1,800,000 = 44% (rounded) (d) Required sales X = $400,000 + $150,000 = $1,375,000 .40...
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6-2A - 65,000 Administrative expenses.

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