[jwalk931]

Hey guys, Im new here and new to accounting.. I know you don't do others homework, but I need a little help finding a calculation.. Here is the problem:

Utech Company bottles and distributes Livit, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 80 cents per bottle. For the year 2008, management estimates the following revenues and costs.

Net sales $1,808,000
Selling expenses—variable $75,000
Direct materials 434,000
Selling expenses—fixed 67,000
Direct labor 355,000
Administrative expenses—variable 23,000
Manufacturing overhead—variable 321,000
Administrative expenses—fixed 65,000
Manufacturing overhead—fixed 287,000


That is the provided information. Now we have to do an income statement:

Prepare a CVP income statement for 2008 based on management's estimates. (List multiple entries in descending order of amount.)
UTECH COMPANY
CVP Income Statement (Estimated)
For the Year Ending December 31, 2008

Net sales $ 1808000
Variable expenses
Cost of goods sold $??
Selling expenses 75000
Administrative expenses 23000

Total variable expenses

Contribution margin


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There is a lot more to the problem but I just want to know how to calculate cost of goods sold for this particular problem. I'm not sure how to get the number! Any help would greatly be appreciated!!

[ROLCAM]

Net sales $1,808,000
Selling expenses—variable $75,000
1) Direct materials 434,000
Selling expenses—fixed 67,000
2) Direct labor 355,000
Administrative expenses—variable 23,000
3) Manufacturing overhead—variable 321,000
Administrative expenses—fixed 65,000
4) Manufacturing overhead—fixed 287,000

COST OF GOODS SOLD = ADD 1),2),3) &4)
inclusive.

[morgaine300]

Net sales $ 1808000
Variable expenses
Cost of goods sold $??
Selling expenses 75000
Administrative expenses 23000

Total variable expenses

Contribution margin

This doesn't make any sense to me. It's like you're mixing variable costing with absorption costing. (Also known by other names.) Not sure what your book is calling a "CVP" income statement. It's obvious it's a CVP chapter, but I've never seen an income statement called by that name. Is there an example in the book showing it to be done this way?

If this is correct, you wouldn't be including fixed overhead in that. This is a bit of carry-over from job & process costing. If they're going to split the variable & fixed down in that fashion, then you also have to deal with product and period costs from prior chapters:

Product costs: direct material, direct labor and overhead (which go through WIP, finished goods and eventually end up in cost of goods sold, when sold)
Period costs: selling & administrative (operating expenses)

The direct material and direct labor are variable, the other 3 are split between variable and fixed. If the above format is correct, only variable is going to end up in there.

There is a lot more to the problem

Some of that might be answering the question.