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Need help with the problems below PR 19-6A Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Blythe Industries Inc. expects to
Need help with the problems below
PR 19-6A Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Blythe Industries Inc. expects to maintain the same inventories at the end of 2012 as at the beginning of the year. The total of all production costs for the year is therefore as- sumed 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 2012. A summary report of these estimates is as follows: Estimated Fixed Cost Estimated Variable Cost (per unit sold) $340,000 Production costs: Direct materials. ............. Direct labor ............................. Factory overhead........................... Selling expenses: Sales salaries and commissions... Advertising Travel ........................ ..... . . . Miscellaneous selling expense .............. Administrative expenses Office and officers' salaries .................. Supplies................ Miscellaneous administrative expense........ Total ................ 80,000 32,000 8,000 7,600 120,000 8,000 4,400 $600,000 It is expected that 8,000 units will be sold at a price of $200 a unit. Maximum sales within the relevant range are 9,000 units. 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 leverageStep by Step Solution
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