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 Variable Cost (per unit sold) Estimated Fixed Cost Production costs: Direct materials $28 19 Direct labor Factory overhead Selling expenses Sales salaries and commissions $614,000 14 127,600 43,200 9,600 10,000 Advertising Travel Miscellaneous selling expense Administrative expenses Office and officers' salaries Supplies Miscellaneous administrative expende 124,700 15,400 14,300 2 3 Total $959,400 $78 I expected that 8.200 units will be sold at a price of 5312 & Unit Maximum sales within the relevant range are 10,000 units Required: 1. Prepare an estimated Income statement for 2017. Belmain Co. Estimated Income Statement For the Year Ended December 31, 2017 Sales 2,558,400 Cost of goods sold: Direct materials 229,600 155,800 Direct labor Factory overhead 728,800 1,114,200 1.444,200 Total cost of goods sold Gross profit Expenses: Selling expenses: Sales salaries and commissions Advertising Travel Miscellaneous selling expense 43,200 9.600 Total selling expenses Administrative expenses: Office and officers' salaries Supplies 124,700 Miscellaneous administrative expense Total administrative expenses Miscellaneous administrative expense Total administrative expenses Total expenses Income from operations Feedback 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. 96