please answer correctly everything that I have not answered. I really need help on 4. 
2.2596 PR 19-6A Contribution margin, break-even sales, cost-volume-profit chart, OBJ. 2, 3, 4, 5 margin of safety, and operating leverage Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 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 Fixed Cost Estimated Variable Cost (per unit sold) $ 46 40 20 $200,000 8 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 110,000 40,000 12,000 7,600 132,000 10,000 13,400 $525,000 4 1 $120 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 2016. 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. E F G H I K L M N P 5. 3 3 Units Margin of safety Sale Price Expected sales Break-even point Margin of safety (in dollars) Expected sales Margin of safety (as a percentage of sales) $ 1,400,000 40.0% 6. 30 01 02 03 04 05 106 107 108 109 110 111 112 113 114 Operating leverage: Unit CMS Units Contribution margin Income from operations Operating leverage 350,000 2.5 F G H I J K L M N 0 Total expenses Income from operations 631,250 $ 350,000 2. Contribution margin ratio: Sales $ 3,500,000 Units 120 Unit Variable Cost $120 25 Variable costs Contribution margin Sales Contribution margin ratio 25.0% Break-even sales: Fixed costs $ 525,000 Unit contribution margin Pr. 19(4)-6A 0 Sale Price - Unit Variable Cost $160 $120 $40 A B D E F G H I ] L M N 0 P Q s Break-even sales (units) Sale price Break-even sales (dollars) K 13.125 $160 $ 2,100,000 4. For each unit level of sales, enter the total sales dollars and total costs. The chart at right will be plotted as you enter the amounts After all points are plotted, grab and move the labels provided at the left to identify each area. Costs $ $ Cost-Volume-Profit Chart $1 Units Sales $ 0 $ 3,000 6.000 9,000 12,000 15,000 18,000 21,000 24,000 5 27,000 Pr. 19(4)-6A Calculation Mode: Automatic Workbook Statistics $1 $1 $1 Share Comm 29 Sort & Filter LO ste Insert Delete Format Ideas Find & Select - Conditional Format Cell Formatting as Table Styles Tables Clipboard Font Alignment Number Cells Editing Ideas B E G H I K L. M N 0 P Q S D SUOSTS $ F LOSS $ Cost-Volume-Profit Chart UNIS 0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 $1 $1 $1 $1 Sales and Costs Operating Loss Area Break Even Point $0 $0 $0 Pr. 19(4)-6A E F G H I K L M N P 5. 3 3 Units Margin of safety Sale Price Expected sales Break-even point Margin of safety (in dollars) Expected sales Margin of safety (as a percentage of sales) $ 1,400,000 40.0% 6. 30 01 02 03 04 05 106 107 108 109 110 111 112 113 114 Operating leverage: Unit CMS Units Contribution margin Income from operations Operating leverage 350,000 2.5
