Contribution margin, break-even sales, cost- volume-prot chart, margin of safety, and operating leverage Belmain Co. expects to maintain the same inventories at the end of
Contribution margin, break-even sales, cost- volume-prot 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: 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 ............................................. Estimated Fixed Cost $ 350.000 340.000 $1.152.000 Esti mated Variable Cost {per unit sold! $50.00 30.00 6.00 M' It is expected that 12,000 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 18,000 units. Instructions 1. Prepare two estimated income statements (for both variable and absorption) for 20Y7. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars 4. What is the expected margin of safety in dollars and as a percentage of sales? (Round to one decimal place.) 5. Determine the operating leverage. Use the information provided below and manually (i.e. no computer but hand written then scanned) prepare TWO income statements: an absorption income statement and a variable income statement (with correct titles, dollar signs, and underlines). Please list ry individual expense item. Also, determine: (1) the break-even in units and dollars, (2) explain what the calculated contribution margin means for this company, (3) what is the expected margin of safety in dollars and as a percentage of sales and explain what these numbers mean for the company. Since this is to be done manually (i.e. NO computer) neatness is a must and points will be deducted for form and neatness. Use the multiplg ap income statement form on page 254 of our text. This assignment must be scanned and upload le submitted similar to the way you submitted PaddleBoard. This must not be submitted in a word or excel program but must be HAND WRITTEN\" Contribution margin, break-even sales, cost- volume-prot 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
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