Contribution Margin, Break-Even Sales,Cost-Volume-Profit Chart,Margin of Safety, andOperating 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 Estimated Variable Cost

Fixed Cost (per unit sold)

Production costs:

Direct materials $30

Direct labor 20

Factory overhead $954,800 15

Selling expenses:

Sales salaries and commissions 198,400 7

Advertising 67,100

Travel 14,900

Miscellaneous selling expense 16,400 6

Administrative expenses:

Office and officers' salaries 193,900

Supplies 23,900 3

Miscellaneous administrative expense 22,440 3

Total $1,491,840 $84

It is expected that 8,140 units will be sold at a price of $420 a unit. Maximum sales within therelevant rangeare 10,000 units.

Required:

Belmain Co.

Estimated Income Statement

For the Year Ended December 31, 20Y7

Sales $3,418,800

Cost of good sold

Direct Materials $244,200

Direct Labor $162,800

Factor overhead 1,076,900

Total cost of goods sold 1,483,900

Gross Profit: 1,934,900

Expenses:

Selling expenses

Sales 255,380

Advertising 67,100

Travel 14,900

Misc. selling expenses 65,250

Total selling expenses 402,630

Admin expenses:

Office & officers' saleries 193,900

supplies 48,320

Misc. selling expense 46,860

Total admin expenses 289,080

Total expenses 691,710

Income from operations $1,243,190

What is the expectedcontribution margin ratio? Round to the nearest whole percent.

_______%

Determine the break-even sales in units and dollars.

Units ________units

Dollars________units

Construct a cost-volume-profit chart on your own paper. What is the break-even sales?

$___________

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

Dollars:$

Percentage: (Round to the nearest whole percent.)%

Determine the operating leverage. Round to one decimal place.