1. 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 20Y7 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				$28
   	Direct labor				19
   	Factory overhead	$316,800			14
   Selling expenses:
   	Sales salaries and commissions	65,800			6
   	Advertising	22,300
   	Travel	5,000
   	Miscellaneous selling expense	5,400			6
   Administrative expenses:
   	Office and officers' salaries	64,400
   	Supplies	7,900			2
   	Miscellaneous administrative expense	7,440			3
   	Total	$495,040			$78

   It is expected that 6,120 units will be sold at a price of $260 a unit. Maximum sales within the relevant range are 8,000 units.

   Required:

   1. Prepare an estimated income statement for 20Y7.

   Belmain Co.
   Estimated Income Statement
   For the Year Ended December 31, 20Y7
   			$fill in the blank 35c53b01af9ffa1_2
   Cost of goods sold:
   		$fill in the blank 35c53b01af9ffa1_4
   		fill in the blank 35c53b01af9ffa1_6
   		fill in the blank 35c53b01af9ffa1_8
   Cost of goods sold			fill in the blank 35c53b01af9ffa1_9
   Gross profit			$fill in the blank 35c53b01af9ffa1_10
   Expenses:
   Selling expenses:
   	$fill in the blank 35c53b01af9ffa1_12
   	fill in the blank 35c53b01af9ffa1_14
   	fill in the blank 35c53b01af9ffa1_16
   	fill in the blank 35c53b01af9ffa1_18
   Total selling expenses		$fill in the blank 35c53b01af9ffa1_19
   Administrative expenses:
   	$fill in the blank 35c53b01af9ffa1_21
   	fill in the blank 35c53b01af9ffa1_23
   	fill in the blank 35c53b01af9ffa1_25
   Total administrative expenses		fill in the blank 35c53b01af9ffa1_26
   Total expenses			fill in the blank 35c53b01af9ffa1_27
   Income from operations			$fill in the blank 35c53b01af9ffa1_28

   2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 4bb1ecf6efa301f_1 %

   3. Determine the break-even sales in units and dollars.

   Units	fill in the blank 4bb1ecf6efa301f_2 units
   Dollars	fill in the blank 4bb1ecf6efa301f_3 units

   4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? $ fill in the blank 4bb1ecf6efa301f_4

   5. What is the expected margin of safety in dollars and as a percentage of sales?

   Dollars:	$fill in the blank 4bb1ecf6efa301f_5
   Percentage: (Round to the nearest whole percent.)	fill in the blank 4bb1ecf6efa301f_6	%

   6. Determine the operating leverage. Round to one decimal place. fill in the blank 4bb1ecf6efa301f_7