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 Estimated Fixed Cost Estimated Variable Cost (per unit sold) Production costs Direct materials $28 Direct labor 19 Factory overhead $377,400 14 Selling expenses Sales salaries and commissions 78,400 6 Advertising 26,500 Travel 5,900 Miscellaneous selling expense 6,500 6 Administrative expenses Office and officers' salaries 76,700 Supplies 9,400 2 Miscellaneous administrative expense 8,880 3 Total $589,680 $78 It is expected that 11,760 units will be sold at a price of $156 a unit Maximum sales within the relevant range are 15,000 units Required 1 Prepare an estimated income statement for 20Y7 Belmain Co Estimated Income Statement For the Year Ended December 31, 20Y7 $ Cost of goods sold $ Cost of goods sold Gross profit $ Expenses Selling expenses $ Total selling expenses $ Administrative expenses $ Total administrative expenses Total expenses Income from operations $ 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 $ Percentage (Round to the nearest whole percent ) 6 Determine the operating leverage Round to one decimal place

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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 same inventories at the end of 20Y7

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:

Estimated Fixed Cost			Estimated Variable Cost (per unit sold)
Production costs:
	Direct materials			$28
	Direct labor			19
	Factory overhead	$377,400		14
Selling expenses:
	Sales salaries and commissions	78,400		6
	Advertising	26,500
	Travel	5,900
	Miscellaneous selling expense	6,500		6
Administrative expenses:
	Office and officers' salaries	76,700
	Supplies	9,400		2
	Miscellaneous administrative expense	8,880		3
	Total	$589,680		$78

It is expected that 11,760 units will be sold at a price of $156 a unit. Maximum sales within the relevant range are 15,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

Belmain Co.
Estimated Income Statement
For the Year Ended December 31, 20Y7
			$
Cost of goods sold:
		$


Cost of goods sold
Gross profit			$
Expenses:
Selling expenses:
	$



Total selling expenses		$
Administrative expenses:
	$


Total administrative expenses
Total expenses
Income from operations			$