Income from operations 309,000 ) Feedback Check My Work 1. Use the absorption costing format. Learning Objective 2, Learning Objective 3, Learning Objective 4, and Learning Objective 5. 2. What is the expected contribution margin ratio? Round to the nearest whole percent. 401 x 90 3. Determine the break-even sales in units and dollars. Units Dollars 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? 7,200 X units 756,000X units 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. 168,000 X 1.7 X Feedback Administrative expenses Office and officers' salaries Supplies Y Miscellaneous administrative expense Total administrative expenses 39,300 4,800 X 17,600 X 61,700 X Total expenses 131,100 | Income from operations 09,000 X Feedback Check My Work 1. Use the absorption costing format. Learning Objective 2, Learning Objective 3, Learning Objective 4, and Learning Objective 5 2. What is the expected contribution margin ratio? Round to the nearest whole percent. 401 X % 3. Determine the break-even sales in units and dollars. Units Dollars 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? 7,200X units 756,000units It is expected that 8,800 units will be sold at a price of $105 a unit. Maximum sales within the relevant range are 11,000 units. Required: 1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales . Cost of goods sold: 924,000 Direct materials Direct labor Factory overhead 132,000 88,000 263,900 | Total cost of goods sold 483,900 Gross profit 440,100 Expenses Selling expenses: Sales salaries and commissions Advertising Travel Miscellaneous selling expense Total selling expenses Office and officers' salaries 26,400 X 13,600 3,000 26,400 X 69,4001 X Administrative expenses: 39,300 v 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 Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials Direct labor Factory overhead $15 10 8 $1937500 Selling expenses: Sales salaries and commissions Advertising Travel Miscellaneous selling expense 40,200 13,600 3,000 3,300 3 3 Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total 39,300 4,800 4,700 $302,400 2 $42 It is expected that 8,800 units will be sold at a price of $105 a unit. Maximum sales within the relevant range are 11,000 units
