Swiss Navy Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of year. Therefore, it is assumed that the total of all production costs for the year is equal to at the cost of goods sold (cost of goods sold). With this in mind, the different department heads to present estimates of the costs of their departments during the year. A summary report of these estimates is as follows: 12,000 units are expected to be sold at a price of $240 per unit. the maximum sales within the relevant range of productive capacity are 18,000 units. (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.) Instructions: 1. Prepare an estimated statement of income and expenses for the year 20Y7 (Prepare an estimated income statement for 20Y7 ). 2. What is the percentage of the expected contribution margin? (What is the expected contribution margin ratio?) 3. Determine the break-even point in units and in dollars (Determine the break-even sales in units and dollars). 4. Prepare the corresponding graph identifying the costvolume-profit relationship, identifying the break-even point, the areas in which the company incurs loss, profit and label the graph with its corresponding title (Construct a cost-volume- profit chart indicating the break-even sales). 5. What is the expected margin of safety, expressed in dollars and as a percentage about the sales? (What is the expected margin of safety in dollars and as a percentage of sales?) 6. Determine the operating leverage (Determine the operating leverage). Swiss Navy Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of year. Therefore, it is assumed that the total of all production costs for the year is equal to at the cost of goods sold (cost of goods sold). With this in mind, the different department heads to present estimates of the costs of their departments during the year. A summary report of these estimates is as follows: 12,000 units are expected to be sold at a price of $240 per unit. the maximum sales within the relevant range of productive capacity are 18,000 units. (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.) Instructions: 1. Prepare an estimated statement of income and expenses for the year 20Y7 (Prepare an estimated income statement for 20Y7 ). 2. What is the percentage of the expected contribution margin? (What is the expected contribution margin ratio?) 3. Determine the break-even point in units and in dollars (Determine the break-even sales in units and dollars). 4. Prepare the corresponding graph identifying the costvolume-profit relationship, identifying the break-even point, the areas in which the company incurs loss, profit and label the graph with its corresponding title (Construct a cost-volume- profit chart indicating the break-even sales). 5. What is the expected margin of safety, expressed in dollars and as a percentage about the sales? (What is the expected margin of safety in dollars and as a percentage of sales?) 6. Determine the operating leverage (Determine the operating leverage)
