Chapter 5 Cost-Volume-Profit Analysits PR 5-6A margin of safety, and operating leverage begin chart. osi 21 Contribution margin, break-even sales, cost-volume-profit end of 20Y3 a ore assute heads were is her heads were tohe cost of goods sold. With this in mind, the various department bie s submit estimates of the costs for their departments during the year. A estimates is as follows: % Wolsey Industries Inc. expects to maintain the same inventories at the ning of the year. The total of all production costs for the year is equal to the cost of repon a T es Estimated Variable Co Estimated Fixed Cost (per unit sold Production costs: s 46 40 20 Direct labor . . . . $200,000 Selling expenses 110,000 40,000 12,000 7,600 Travel . . . Miscellaneous selling expense Administrative expenses: 132,000 10,000 13,400 $525,000 Office and officers' salaries $120 Total.... It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sale the relevant range are 27,000 units. Instructions 1. Prepare an estimated income statement for 20Y3. 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 6. Determine the operating leverage. sales? 8. The Cutting Department of Karachi Carpet Company Provides the following data for January Assume that all materials are added at the beginning of the process. $22 960 Work Direct Materials (1,400 x $12.65) Conversion (1,400 x 75% x $5.00) in process January 1, 1400 units 75% completed $17.710 22.960 Materials added during Direct labor for January $742,400 134550 Jan from weaving dept 58,000 units