Bookmark Wolsey Industries Inc. expects to maintain the same inventories at the end of 2014 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 2014. A summary report of these estimates is as follows: Wolsey Industries Inc. expects to maintain the same inventories at 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. Instructions 1. Prepare an estimated income statement for 2014. 2. What is the expected contribution margin ratio? 3. Determine the break- even sales in units and dollars. 4. Construct a cost- volume- profit chart indicating the break- even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? 6. Determine the operating leverage.

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Excel File Edit View Insert Format Tools Data Window Help S to 4 4 Sat Jun 10 6:35:28 PM a E WRD e PR 21-6A.xlsx Sheets Charts SmartArt Graphics WordArt 10 cells with non-gray backgrounds are protected and cannot be edited. il An asterisk will appear to the right of an incorrect entry. 12 13 14 WOLSEYINDUSTRIES INC 15 stimated Income S 16 For the Ye d D mber 31, 2016 17 18 Sales 3,500,000 19 Cost of goods sold 20 Direct material 006,250 21 Direct labor 875,000 22 Factory overhead 637,500 23 Cost of goods sold 24 Gross profit 981,250 25 26 Selling 27 Sales salaries and commissions 285,000 28 40,000 29 Travel 2,000 30 Miscellaneous selling expen 29,475 31 Total selling expenses 366,475 32 Administrative expenses 33 Office and officers' salaries 32,000 34 Supplies 97,500 35 Miscellaneous administrative expense 35.275 36 Total administrative expenses 264.776 37 Total expenses 631,250 38 Income from operations 50.000 39 40 41 2. 42 Contribution margin ratio: 43 Sales 3,500,000 Units Unit Variable Cost 44 45 Variable costs 2,626,000 46 Contribution margin 875,000 Sales 3,500,000 48 Contribution margin ratio 25.0% 49 50 51 52 Break-even sales