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 Fixed Cost Estimated Variable Cost (per unit sold) Production costs: Direct materials Direct labor $50.00 30.00 Factory overhead $350,000 6.00 Selling expenses: Sales salaries and commissions 340,000 4.00 Advertising 116,000 Travel 4,000 Miscellaneous selling expense 2,300 1.00 Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense 325,000 6,000 4.00 8,700 1.00 $1,152,000 $96.00 Total 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. Required: 1. Prepare an estimated income statement for 2017. Belmain Co. Estimated Income Statement For the Year Ended December 31, 2017 Cost of goods sold: Total cost of goods sold Gross profit Expenses: Selling expenses: Total selline expenses 00 Belmain Co. Estimated Income Statement For the Year Ended December 31, 2017 Cost of goods sold: Total cost of goods sold Gross profit Expenses: Selling expenses: Total selling expenses Administrative expenses: 0000 000 2000 00 Total administrative expenses Total expenses Operating income 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 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 (If required, round the percent to one decimal place, e.g. 15.4%.) 6. Determine the operating leverage. %