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				$13
	Direct labor				9
	Factory overhead	$326,900			6
Selling expenses:
	Sales salaries and commissions	67,900			3
	Advertising	23,000
	Travel	5,100
	Miscellaneous selling expense	5,600			3
Administrative expenses:
	Office and officers' salaries	66,400
	Supplies	8,200			1
	Miscellaneous administrative expense	7,620			1
	Total	$510,720			$36

It is expected that 9,880 units will be sold at a price of $120 a unit. Maximum sales within the relevant range are 12,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

Belmain Co. Estimated Income Statement For the Year Ended December 31, 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
Gross profit			$fill in the blank
Expenses:
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
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
Total expenses			fill in the blank
Income from operations			$fill in the blank

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

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

Units	fill in the blank
Dollars	fill in the blank

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

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

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

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