Contribution Margin, Break-Even Sales, Cost-Volume-Profit Graph, and Operating Leverage Organic Health Care Products Inc. expects to maintain the same inventories at the end of 20Y8 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 20Y8. A summary report of these estimates is as follows: Estimated Variable Cost Estimated Fixed Cost (per unit sold) Production costs Direct materials Direct labor Factory overhead s26 17 13 $397,800 Selling expenses 28,000 82,700 6,200 6,800 Advertising Sales salaries and commissions Travel Miscellaneous selling expense Administrative expenses 80,800 9,900 9,400 $621,600 Office and officers' salaries Supplies Miscellaneous administrative expense Total s72 It is expected that 7,400 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 9,000 units Instructions: 1. Prepare an estimated income statement for 20Y8 Organic Health Care Products Inc. Estimated Income Statement For the Year Ended December 31, 20Y8 Sales Cost of goods sold Direct materials Direct labor Factory overhead Cost of goods sold Gross proft Selling expenses: Sales salaries and commissions Advertising Trave Miscellaneous selling Total selling expenses Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total administrative expenses Total expenses Operating income 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units. units 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales in dollars? 5. Determine the operating leverage. Round your answer to one decimal place