Belmain Co. expects to maintain the same inventories at the end of 20Y7 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)Production costs: Direct materials $17 Direct labor 12 Factory overhead$154,800 9 Selling expenses: Sales salaries and commissions32,200 4 Advertising10,900 Travel2,400 Miscellaneous selling expense2,700 3 Administrative expenses: Office and officers' salaries31,400 Supplies3,900 1 Miscellaneous administrative expense3,620 2 Total$241,920 $48

It is expected that 9,240 units will be sold at a price of $96 a unit. Maximum sales within the relevant range are 12,000 units.

Required:

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1. Prepare an estimated income statement for 20Y7.

Direct materialsIncome from operationsMiscellaneous administrative expenseSales salaries and commissionsSales $- Select -Cost of goods sold: Direct materialsIncome from operationsSalesSuppliesTravel $- Select - AdvertisingDirect laborIncome from operationsLoss from operationsOffice and officers' salaries - Select - Factory overheadMiscellaneous administrative expenseSalesSuppliesTravel - Select - Cost of goods sold fill in the blank f70b24f71063fe1_9Gross profit $fill in the blank f70b24f71063fe1_10Expenses: Selling expenses: Factory overheadIncome from operationsMiscellaneous administrative expenseSales salaries and commissionsSales$- Select - AdvertisingCost of goods manufacturedDirect materialsOffice and officers' salariesSales- Select - Direct laborFactory overheadSalesSuppliesTravel- Select - Direct materialsMiscellaneous administrative expenseMiscellaneous selling expenseSalesSupplies- Select - Total selling expenses $fill in the blank f70b24f71063fe1_19 Administrative expenses: AdvertisingDirect laborOffice and officers' salariesSales salaries and commissionsTravel$- Select - Direct materialsFactory overheadSalesSuppliesTravel- Select - Direct materialsMiscellaneous administrative expenseMiscellaneous selling expenseSales salaries and commissionsSales- Select - Total administrative expenses fill in the blank f70b24f71063fe1_26 Total expenses fill in the blank f70b24f71063fe1_27Income from operations $fill in the blank f70b24f71063fe1_28

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2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 88827e0c0026071_1 %

3. Determine the break-even sales in units and dollars.

Unitsfill in the blank 88827e0c0026071_2 unitsDollarsfill in the blank 88827e0c0026071_3 units

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ fill in the blank 88827e0c0026071_4

5. What is the expected margin of safety in dollars and as a percentage of sales?

Dollars:$fill in the blank 88827e0c0026071_5 Percentage: (Round to the nearest whole percent.)fill in the blank 88827e0c0026071_6%

6. Determine the operating leverage. Round to one decimal place. fill in the blank 88827e0c0026071_7