just do number 4 the cost volume profit chart indicating break even sales

Chapter 19 Cost-Volume-Profit Analysis PR 19-6A Contribution margin, break-even sales, cost-volume-profit chart. Obj. 2.3.4.5 2.2596 Wolsey Industries Inc. expects to maintain the same inventories at the end of 2013 as a margin of safety, and operating leverage beginning of the year. The total of all production costs for the year is therefore assumed to be submit estimates of the costs for their departments during the year. A summary report of these equal to the cost of goods sold. With this in mind, the various department heads were asked to EL TEMPLATE Estimated Variable cost estimates is as follows: Fixed Cost Estimated (per unit sold) $ 46 40 20 8 Production costs: Direct materials. Direct labor $200,000 Factory overhead. Selling expenses 110,000 Sales salaries and commissions. 40,000 Advertising.. 12,000 Travel.. 7,600 Miscellaneous selling expense Administrative expenses: Office and officers'salaries .... 132,000 Supplies........ 10,000 Miscellaneous administrative expense. 13,400 Total......... $525,000 It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units. Instructions 1. Prepare an estimated income statement for 20Y3. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? 6. Determine the operating leverage. $120 Answer 1 of 1 Done SOLUTION: ESTIMATED INCOME STATEMENT Sales (21875 x 160) 3500000 Less: Variable Costs (21875 x 120) 2625000 Contribution Margin 875000 Less: Fixed Costs 525000 Net Operating Income 350000 EXPECTED CONTRIBUTION MARGIN RATIO Contribution margin ratio = Contribution margin / Sales = 875000/3500000 = 25% BREAKEVEN POINT IN UNITS AND DOLLARS Breakeven point in units = Fixed Costs / Contribution margin per unit = 525000/(160-120) = 525000/40 = 13125 units Breakeven point in dollars = 13125 x 160 = $2100000 MARGIN OF SAFETY Megin of Safety = Sales - Breakeven Sales = 3500000 - 2100000 = $1400000 Margin of Safet (%) = margin of safety / Sales = 1400000/3500000 = 40% OPERATING LEVERAGE Degree of Operating Leverage = Contribution Margin / Operating Income = 875000/350000 = 2.5 PLEASE LIKE (UPVOTE)