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 2017 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: Estimated Variable Cost Estimated (per Fixed unit Cost sold) Production costs: Direct materials $26 Direct labor 17 $967,700 13 Factory overhead Selling expenses Sales salaries and commissions Advertising 201,100 68,000 15,100 Travel Miscellaneous selling expense 16,600 5 Administrative expenses office and officers' salaries 196,600 24,200 Supplies 2 Supplies 24,200 2 Miscellaneous administrative expense 22,700 3 Total $1,512,000 $72 It is expected that 10,500 units will be sold at a price of $288 a unit. Maximum sales within the relevant range are 13,000 units. Required: 1. Prepare an estimated income statement for 2017 Belmain Co. Estimated Income Statement For the Year Ended December 31, 2017 Sales Cost of goods sold Direct materials Direct labor Factory overhead Cost of goods sold Gross profit Expenses: Selling expenses: Sales salaries and commissions Advertising Travel Miscellaneous selling expense Total selling expenses Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total administrative expenses B Total expenses Income from operations Feedback Check My Work 1. Use the absorption costing format. 2. What is the expected contribution margin ratio? Round to the nearest whole percent. 3. Determine the break-even sales in units and dollars. Units units 5 Dollars units 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ 5. What is the expected margin of safety in dollars and as a percentage of sales? Dollars: Total expenses Income from operations 00 Feedback Check My Work 1. Use the absorption costing format. 2. What is the expected contribution margin ratio? Round to the nearest whole percent. % 3. Determine the break-even sales in units and dollars. Units units Dollars units 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ 5. What is the expected margin of safety in dollars and as a percentage of sales? Dollars: 96 Percentage: (Round to the nearest whole percent.) 6. Determine the operating leverage. Round to one decimal place