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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, breakeven sales, costvolumeprofit chart, margin of safety, and operating leverage
Belmain Co expects to maintain the same inventories at the end of Y 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 $
Direct labor
Factory overhead $
Selling expenses:
Sales salaries and commissions
Advertising
Travel
Miscellaneous selling expense
Administrative expenses:
Office and officers' salaries
Supplies
Miscellaneous administrative expense
Total $ $
It is expected that units will be sold at a price of $ a unit. Maximum sales within the relevant range are units.
Required:
Question Content Area
Prepare an estimated income statement for Y
Belmain Co
Estimated Income Statement
For the Year Ended December Y
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
What is the expected contribution margin ratio? Round to the nearest whole percent.
fill in the blank of
Determine the breakeven sales in units and dollars.
Units fill in the blank of units
Dollars fill in the blank of $
Construct a costvolumeprofit chart on your own paper. What is the breakeven sales?
fill in the blank of $
What is the expected margin of safety in dollars and as a percentage of sales?
Dollars fill in the blank of $
Percentage: Round to the nearest whole percent. fill in the blank of
Determine the operating leverage. Round to one decimal place.
fill in the blank of
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