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…

Answered: 1. Prepare a CVP income statement for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

$........

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