Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Instructions Accounts, Labels and Amount Descriptions Income Statement Instructions Wolsey Industries Inc. expects to maintain the same inventories at the end of 2078 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: 1 Estimated Fixed Estimated Variable Cost (per Cost unit sold) 1 Production costs Direct materials $46.00 Direct labor 40.00 5200,000.00 20.00 1 Factory overhead Selling expenses Sales salaries and commissions Advertising Travel 110,000.00 8.00 40,000.00 12.000,00 Miscellaneous selling expense 7600.00 100 11 Administrative expenses Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Instructions Accounts, Labels and Amount Descriptions Income Statement Instructions 11 Administrative expenses 12 Office and officers salaries 132,000.00 11 Supplies Miscellaneous administrative expense 10,000.00 4.00 1.00 15,400.00 5525,000.00 15 Total $120.00 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, Required: 1. Prepare an estimated income statement for 2078. Be sure to complete the statement heading, Refer to the Nat of Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount For example: Netloss should be negative. Expenses should be positive. A colon () will automatically appear if it is required 2. What is the expected contribution margin ratio? 3 Determine the break-even sales in unit and dollars 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? 6. Determine the operating leverage Round to one decimal place. Accounts, Labels and Amount Descriptions Accounts Advertising Direct materials Direct labor Factory overhead Miscellaneous selling expense It i Miscellaneous administrative expense Office and officers' salaries Sales Sales salaries and commissions Supplies Travel Labels December 31, 20Y8 Expenses For the Month Ended December 31, 20Y8 For the Year Ended December 31, 20Y8 For the Year Ended December 31, 20Y8 Amount Descriptions Cost of goods sold Gross profit Total selling expenses Total administrative expenses Total expenses Income from operations 7 Income Statement 1. Prepare an estimated income statement for 20Y8. Be sure to complete the statement heading. Refer to the list of Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. A colon (.) will automatically appear if it is required Wolsey Industries Inc Estimated Income Statement (Label) 1 2 Cost of goods sold: 3 4 5 7 Additional Questions 1. De 2. What is the expected contribution margin ratio? cal % ap 3. Determine the break-even sales in units and dollars. Units units Dollars $ 1 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ 3 5 Final Questions 2. 5. What is the expected margin of safety in dollars and as a percentage of sales? Dollars $ 3. Percentage % 6. Determine the operating leverage. Round to one decimal place. 0 4 3 $
