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				$26
	Direct labor				17
	Factory overhead	$793,500			13
Selling expenses:
	Sales salaries and commissions	164,900			6
	Advertising	55,800
	Travel	12,400
	Miscellaneous selling expense	13,600			5
Administrative expenses:
	Office and officers' salaries	161,200
	Supplies	19,800			2
	Miscellaneous administrative expense	18,640			3
	Total	$1,239,840			$72

It is expected that 9,840 units will be sold at a price of $288 a unit. Maximum sales within the relevant range are 12,000 units.

Required:

Question Content Area

1. Prepare an estimated income statement for 20Y7.

?			$- Select -
Cost of goods sold:
?		$- Select -
?		- Select -
?		- Select -
Cost of goods sold			fill in the blank 768997fe0075fa8_9
Gross profit			$fill in the blank 768997fe0075fa8_10
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 768997fe0075fa8_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 768997fe0075fa8_26
Total expenses			fill in the blank 768997fe0075fa8_27
Income from operations			$fill in the blank 768997fe0075fa8_28

Question Content Area

2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 1 %

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

Units	fill in the blank 2 units
Dollars	fill in the blank 3 units

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ fill in the blank 114436079032016_4

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

Dollars:	$fill in the blank 5
Percentage: (Round to the nearest whole percent.)	fill in the blank 6	%

6. Determine the operating leverage. Round to one decimal place. fill in the blank 7