There are two problems this week. Click the tab at the bottom of the spreadsheet to move to problem 2. Best Harmonica Company manufactures and sells harmonicas to distributors. The model they produce sells to the distributors for $8.00 each. Following are cost estimates: Sales $3,480,000

There are two problems this week. Click the tab at the bottom of the spreadsheet to move to problem 2.

Best Harmonica Company manufactures and sells harmonicas to distributors. The model they produce sells to the distributors for $8.00 each. Following are cost estimates:

Sales	$3,480,000
Direct materials	543,750
Direct labor	761,250
Manufacturing overhead–variable	152,250
Manufacturing overhead–fixed	640,000
Selling expenses–variable	78,300
Selling expenses–fixed	300,000
Administrative expenses–variable	47,850
Administrative expenses–fixed	185,000

Instructions

A. Prepare a CVP income statement based on these cost estimates.
B. Commute contribution margin ratio.
C. Compute the break-even point in (1) units and (2) dollars.
D. Compute the margin of safety ratio.
E. Determine the sales dollars required to earn net income of $1,000,000.