PR 21-6B

The estimated fixed costs for the current year are $46, 800. Determine the estimated units of sales of the overall (total) product E, necessary in reach the break even point for the current year. Based on the break even sales (units) in part (1), determine the unit sales of both the 12" pizza and 16" pizza for the current year. Assume that the sales mix was 50% 12" pizza and 50% 16" pizza. Compare the break-even point with that in part (1). Why is so different? Belmain Co. expects to maintain the same inventories at the end of 2016 as 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. It is expected that 12,000 units will be sold at a price of $240 a unit. Maximum within the relevant range are 18,000 units. Prepare an estimated income statement for 2016. What is the expected contribution margin ratio? Determine the break even sales in units and dollars. Construct a cost volume profit chart indicating the break even sales. What is the expected margin of safety in dollars and as a percentage of sales Determine the operating leverage