Question
It is expected that 15,000 units will be sold at a price of $260 a unit. Maximum sales within relevant range are 20,000 units. Instructions:
It is expected that 15,000 units will be sold at a price of $260 a unit. Maximum sales within relevant range are 20,000 units.
Instructions:
- Prepare an estimated income statement
- What is the expected contribution margin ratio?
- Determine the break-even sales in units and dollars
- What is the expected margin of safety in dollars and as a percentage of sales? Round to one decimal place
- Determine the operating leverage
A Company Estimated Income Statement For the Year Ended December 31 | |||
Sales |
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Cost of goods sold: |
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Direct materials |
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Direct labor |
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Factory overhead |
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Total cost of goods sold |
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Gross profit |
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Expenses: |
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Selling expenses: |
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Sales salaries and commissions |
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Advertising |
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Travel |
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Miscellaneous selling expense |
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Total selling expenses |
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Administrative expenses: |
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Office and officers salaries |
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Supplies |
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Miscellaneous administrative expense |
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Total administrative expenses |
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Total expenses |
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Operating income |
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