**Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage**Belman Co. expects to maintain the same inventories at the end of 20Y7 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 departments 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)** ||--------------------------------|--------------------------|---------------------------------------------|| **Production costs:** | | || Direct materials | | $28 || Direct labor | | 19 || Factory overhead | $139,800 | 14 || **Selling expenses:** | | || Sales salaries and commissions | $39,000 | 6 || Advertising | 9,800 | || Travel | 2,200 | || Miscellaneous selling expense | 4,100 | 6 || **Administrative expenses:** | | || Office and officers' salaries | $28,300 | || Supplies | | 2 || Miscellaneous administrative expense | 3,000 | 3 || **Total** | $218,400 | $78 |It is expected that 6,300 units will be sold at a price of $156 a unit. Maximum sales within the relevant range are 8,000 units.**Required:**1. **Prepare an estimated income statement for 20Y7.** **Belman Co.** **Estimated Income Statement** **For the Year Ended December 31, 20Y7** - **Sales**: $982,800 - **Cost of goods sold:** - Direct materials: $176,400 - Direct labor: 75,600 - Factory overhead: 228,000 **Total cost of goods sold**: $480,000 - **Gross profit** - **Expenses:** - **Selling expenses:** - Sales salaries and commissions: $66,800 - Advertising:

Break Even Point is a situation for a corporation when, it's earning no profits and incurring no…

1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales 982,800 Cost of goods sold: Direct materials 176,400 Direct labor 75,600 Factory overhead 228,000 Total cost of goods sold 480,000 Gross profit

1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales 982,800 Cost of goods sold: Direct materials 176,400 Direct labor 75,600 Factory overhead 228,000 Total cost of goods sold 480,000 Gross profit

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Question

**Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage**

Belman Co. expects to maintain the same inventories at the end of 20Y7 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 departments 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)** |
|--------------------------------|--------------------------|---------------------------------------------|
| **Production costs:** | | |
| Direct materials | | $28 |
| Direct labor | | 19 |
| Factory overhead | $139,800 | 14 |
| **Selling expenses:** | | |
| Sales salaries and commissions | $39,000 | 6 |
| Advertising | 9,800 | |
| Travel | 2,200 | |
| Miscellaneous selling expense | 4,100 | 6 |
| **Administrative expenses:** | | |
| Office and officers' salaries | $28,300 | |
| Supplies | | 2 |
| Miscellaneous administrative expense | 3,000 | 3 |
| **Total** | $218,400 | $78 |

It is expected that 6,300 units will be sold at a price of $156 a unit. Maximum sales within the relevant range are 8,000 units.

**Required:**

1. **Prepare an estimated income statement for 20Y7.**

**Belman Co.**

**Estimated Income Statement**

**For the Year Ended December 31, 20Y7**

- **Sales**: $982,800

- **Cost of goods sold:**
- Direct materials: $176,400
- Direct labor: 75,600
- Factory overhead: 228,000

**Total cost of goods sold**: $480,000

- **Gross profit**

- **Expenses:**
- **Selling expenses:**
- Sales salaries and commissions: $66,800
- Advertising:

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