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Contribution margin, break - even sales, cost - volume - profit chart, margin of safety, and operating leverage Belmain Co . expects to maintain the

Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage
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:
Line Item Description Estimated
Fixed Cost Estimated Variable Cost
(per unit sold)
Production costs:
Direct materials $26
Direct labor 17
Factory overhead $235,00013
Selling expenses:
Sales salaries and commissions 48,8006
Advertising 16,500
Travel 3,700
Miscellaneous selling expense 4,0005
Administrative expenses:
Office and officers' salaries 47,700
Supplies 5,9002
Miscellaneous administrative expense 5,6003
Total $367,200 $72
It is expected that 6,800 units will be sold at a price of $180 a unit. Maximum sales within the relevant range are 9,000 units.
Required:
Question Content Area
1. Prepare an estimated income statement for 20Y7.
Belmain Co.
Estimated Income Statement
For the Year Ended December 31,20Y7
Line Item Description Amount Amount Amount
$Sales
Cost of goods sold:
$Direct materials
Direct labor
Factory overhead
Total cost of goods sold Total cost of goods sold
Gross profit $Gross profit
Expenses:
Selling expenses:
$Sales salaries and commissions
Advertising
Travel
Miscellaneous selling expense
Total selling expenses $ Total selling expenses
Administrative expenses:
$Office and officers' salaries
Supplies
Miscellaneous administrative expense
Total administrative expenses Total administrative expenses
Total expenses Total expenses
Operating income $Operating income
Question Content Area
2. What is the expected contribution margin ratio? (Round to the nearest whole percent.)
fill in the blank 1 of 1%
3. Determine the break-even sales in units and dollars.
Units fill in the blank 1 of 2 units
Dollars fill in the blank 2 of 2$
4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
fill in the blank 1 of 1$
5. What is the expected margin of safety in dollars and as a percentage of sales?
Dollars fill in the blank 1 of 2$
Percentage: (Round to the nearest whole percent.) fill in the blank 2 of 2%
6. Determine the operating leverage. (Round to one decimal place.)
fill in the blank 1 of 1

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