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 $13 Direct labor Factory overhead $210,100 6 Selling expenses: Sales salaries and commissions 43,700 3 Advertising 14,800 Travel 3,300 Miscellaneous selling expense 3,600 3 Administrative expenses: Office and officers' salaries 42,700 5,300 1 Supplies Miscellaneous administrative expense 4,820 1 Total $328,320 $36 It is expected that 6,080 units will be sold at a price of $180 a unit. Maximum sales within the relevant range are 8,000 units. Required: 1. Prepare an estimated income statement for 2017. Belmain Co. Estimated Income Statement For the Year Ended December 31, 2017 Sales 1,094,400 Cost of goods sold: Dirert materials 70 00 Belmain Co. Estimated Income Statement For the Year Ended December 31, 2047 1,094,400 Sales Cost of goods sold: Direct materials Direct labor 79,040 54.720 Factory overhead 246,580 380,340 714,060 Total cost of goods sold Gross profit Expenses: Selling expenses: Sales salaries and commissions Advertising Travel Miscellaneous selling expense 61,940 14,800 3,300 21,840 101,880 42,700 Total selling expenses Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense 11,380 10,900 Total administrative expenses 64,980 Total expenses 166,860 Operating income 547,200 2. What is the expected contribution margin ratio? Round to the nearest whole percent. 80 % 3. Determine the break-even sales in units and dollars. Units units Dollars 410,400 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