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	$219,300			9
Selling expenses:
	Sales salaries and commissions	45,600			4
	Advertising	15,400
	Travel	3,400
	Miscellaneous selling expense	3,800			3
Administrative expenses:
	Office and officers' salaries	44,600
	Supplies	5,500			1
	Miscellaneous administrative expense	5,120			2
	Total	$342,720			$48

It is expected that 8,160 units will be sold at a price of $120 a unit. Maximum sales within the relevant range are 10,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

Belmain Co.
Estimated Income Statement
For the Year Ended December 31, 20Y7
Cost of goods sold:
Total cost of goods sold
Gross profit
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total expenses
Operating income

2. What is the expected contribution margin ratio? Round to the nearest whole percent. %

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

Units
Dollars

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ fill in the blank 9cc85801cfb8063_4

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

Dollars:
Percentage: (Round to the nearest whole percent.)		%

6. Determine the operating leverage. Round to one decimal place. fill in the blank 9cc85801cfb8063_7