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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 2017 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) 4 Production costs: Direct materials $50.00 Direct labor 30.00 Factory overhead $350,000 6.00 Selling expenses: Sales salaries and commissions 340,000 4.00 Advertising 116,000 Travel 4,000 Miscellaneous selling expense 2,300 1.00 Administrative expenses: Office and officers' salaries 325,000 Supplies 6,000 Miscellaneous administrative expense 8,700 18 4.00 1.00 Miscellaneous administrative expense 8,700 $1,152,000 1.00 $96.00 Total It is expected that 12,000 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 18,000 units, Required: 1. Prepare an estimated income statement for 2017. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales X Cost of goods sold: Direct materials Direct labor Factory overhead Total cost of goods sold Sales salaries and commissions Advertising Gross profit Expenses: Selling expenses: XX X X X X X Advertising Travel - V Miscellaneous selling expense Total selling expenses Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total administrative expenses Total expenses Operating income. X X X X X X X X X X 2. What is the expected contribution margin ratio? 50 X % 3. Determine the break-even sales in units and dollars. C Units 4,080 X units. Dollars 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? 5. What is the expected margin of safety in dollars and as a percentage of sales? Dollars Percentage (If required, round the percent to one decimal place, e.g. 15.4%.) 6. Determine the operating leverage. 571,200 X %