Answered step by step
Verified Expert Solution
Question
1 Approved Answer
6A Contribution margin, break-even sales, cost-volume-profit chart, OBJ. 2, 3, 4, 5 margin of safety, and operating leverage Wolsey Industries Inc. expects to maintain the
6A Contribution margin, break-even sales, cost-volume-profit chart, OBJ. 2, 3, 4, 5 margin of safety, and operating leverage Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Fixed Cost Estimated Variable Cost (per unit sold) $ 46 40 20 $200,000 Production costs: Direct materials.. Direct labor Factory overhead. Selling expenses: Sales salaries and commissions.. Advertising. Travel Miscellaneous selling expense Administrative expenses: Office and officers' salaries Supplies........ Miscellaneous administrative expense. Total. 110,000 40,000 12,000 7,600 - 1 0 4 132,000 10,000 13,400 $525,000 1 $120 It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units. 4. Construct a cost-volume-profit chart indicating the break-even sales. A B. D E F. G H J K L M N P 4. For each unit level of sales, enter the total sales dollars and total costs. The chart at right will be plotted as you enter the amounts. After all points are plotted, grab and move the labels provided at the left to identify each area. Units Sales $ Costs $ 480,000 8. 9 Cost-Volume-Profit Chart 0 1 2 73 74 75 0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 400,000 300,000 SS DOO 77 78 79 80 81 82 200,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started