Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Wolsey Industries Inc. expects to maintain the same inventories at the end of 2013 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 Estimated Fixed Cost Estimated Variable Cost (per unit sold) $46 40 $200,000 20 Direct labor Factory overhead Selling expenses: Sales salaries and commissions 110,000 Advertising 40,000 Travel 12,000 Miscellaneous selling expense 7,600 Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total 132,000 10,000 13,400 $525,000 1 $120 It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units.