Question 8Pronghorn Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 90 cents per bottle. For the year 2017, management estimates the following revenues and costs.Sales $1,956,000 Selling expenses—variable $50,000Direct materials 500,000 Selling expenses—fixed 65,000Direct labor 360,000 Administrative expenses—variable 69,200Manufacturing overhead—variable 390,000 Administrative expenses—fixed 48,000Manufacturing overhead—fixed 374,800 1. Prepare a CVP income statement for 2017 based on management’s estimates.2. Compute the break-even point in (1) units and (2) dollars.(1) Compute the break-even point .......... units(2) Compute the break-even point $........ 3. Determine the sales dollars required to earn net income of $88,200.Required sales dollars $........

Cost-volume-profit (CVP) analysis is a method of cost accounting that looks at the impact that…

1. Prepare a CVP income statement for 2017 based on management’s estimates. 2. Compute the break-even point in (1) units and (2) dollars. (1) Compute the break-even point .......... units (2) Compute the break-even point $........ 3. Determine the sales dollars required to earn net income of $88,200. Required sales dollars $........

1. Prepare a CVP income statement for 2017 based on management’s estimates. 2. Compute the break-even point in (1) units and (2) dollars. (1) Compute the break-even point .......... units (2) Compute the break-even point $........ 3. Determine the sales dollars required to earn net income of $88,200. Required sales dollars $........

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 26BEA

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Question 8

Pronghorn Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 90 cents per bottle. For the year 2017, management estimates the following revenues and costs.

Sales	$1,956,000	Selling expenses—variable	$50,000
Direct materials	500,000	Selling expenses—fixed	65,000
Direct labor	360,000	Administrative expenses—variable	69,200
Manufacturing overhead—variable	390,000	Administrative expenses—fixed	48,000
Manufacturing overhead—fixed	374,800

1. Prepare a CVP income statement for 2017 based on management’s estimates.

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

(1)		Compute the break-even point		..........	units
(2)		Compute the break-even point		$........

3. Determine the sales dollars required to earn net income of $88,200.

Required sales dollars

$........

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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