Soldner Health Care Products Inc. expects to maintain the same inventories at the end of 2014 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 2014. A summary report of these estimates is as follows:

		Estimated Fixed Cost			Estimated Variable Cost (per unit sold)
Production costs:
	Direct materials				$13
	Direct labor				9
	Factory overhead	$179,700			6
Selling expenses:
	Sales salaries and commissions	37,300			3
	Advertising	12,600
	Travel	2,800
	Miscellaneous selling expense	3,100			3
Administrative expenses:
	Office and officers' salaries	36,500
	Supplies	4,500			1
	Miscellaneous administrative expense	4,300			1
	Total	$280,800			$36

It is expected that 11,700 units will be sold at a price of $72 a unit. Maximum sales within the relevant range are 15,000 units.

Required:

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1. Prepare an estimated income statement for 2014.

Soldner Health Care Products Inc.
Estimated Income Statement
For the Year Ended December 31, 2014
Sales						$
Cost of goods sold:
Direct materials				$
Direct labor
Factory overhead
Cost of goods sold
Gross profit						$
Expenses:
Selling expenses:
Sales salaries and commissions		$
Advertising
Travel
Miscellaneous selling expense
Total selling expenses				$
Administrative expenses:
Office and officers' salaries		$
Supplies
Miscellaneous administrative expense
Total administrative expenses
Total expenses
Income from operations						$

2. What is the expected contribution margin ratio? Round to the nearest whole percent. %

3. Determine the break-even sales in units. units

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: (Round to the nearest whole percent.)		%

6. Determine the operating leverage. Round to one decimal place.