Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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:

1		Estimated Fixed Cost	Estimated Variable Cost (per unit sold)
2	Production costs:
3	Direct materials		$58.00
4	Direct labor		38.00
5	Factory overhead	$194,000.00	20.00
6	Selling expenses:
7	Sales salaries and commissions	102,000.00	8.00
8	Advertising	42,000.00
9	Travel	8,000.00
10	Miscellaneous selling expense	7,800.00	1.00
11	Administrative expenses:
12	Office and officers salaries	135,200.00
13	Supplies	10,000.00	2.00
14	Miscellaneous administrative expense	14,600.00	1.00
15	Total	$513,600.00	$128.00

It is expected that 21,400 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 26,000 units.

	Required:
1.	Prepare an estimated income statement for 20Y8. Be sure to complete the statement heading. Refer to the list of Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. A colon (:) will automatically appear if it is required.
2.	What is the expected contribution margin ratio?
3.	Determine the break-even sales in units and dollars. Round your answers to the nearest whole number.
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? Round your answers to the nearest whole number.
6.	Determine the operating leverage. Round to one decimal place.