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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.

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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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. %24
Transcribed Image Text: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. %24
Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain 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 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: Estimated Variable Cost Estimated (per Fixed unit Cost sold) Production costs: Direct materials $19 ) Direct labor 13 Factory overhead $289,300 10 Selling expenses: Sales salaries and commissions 60,100 4 Advertising 20,300 Travel 4,500 Miscellaneous selling expense 5,000 Administrative expenses: Office and officers' salaries 58,800 Supplies 7,200 2 Miscellaneous administrative expense 6,780 2 Total $451,980 $54 It is expected that 8,680 units will be sold at a price of $135 a unit. Maximum sales within the relevant range are 11,000 units. Required: 1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales 1.171.800 Cost of goods sold: Direct materials Direct labor 164.920 112,840 Factory overhead 376.100 Cost of goods sold 653,860 Gross profit 517,940 Expenses: Selling expenses: Sales salaries and commissions 94.820 Advertising 20,300 Travel 4.500 Miscellaneous selling expense 39,720 Total selling expenses 159.340 Administrative expenses: Office and officers' salaries 58,800 Supplies 24.560 Miscellaneous administrative expense 24,140
Transcribed Image Text:Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain 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 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: Estimated Variable Cost Estimated (per Fixed unit Cost sold) Production costs: Direct materials $19 ) Direct labor 13 Factory overhead $289,300 10 Selling expenses: Sales salaries and commissions 60,100 4 Advertising 20,300 Travel 4,500 Miscellaneous selling expense 5,000 Administrative expenses: Office and officers' salaries 58,800 Supplies 7,200 2 Miscellaneous administrative expense 6,780 2 Total $451,980 $54 It is expected that 8,680 units will be sold at a price of $135 a unit. Maximum sales within the relevant range are 11,000 units. Required: 1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales 1.171.800 Cost of goods sold: Direct materials Direct labor 164.920 112,840 Factory overhead 376.100 Cost of goods sold 653,860 Gross profit 517,940 Expenses: Selling expenses: Sales salaries and commissions 94.820 Advertising 20,300 Travel 4.500 Miscellaneous selling expense 39,720 Total selling expenses 159.340 Administrative expenses: Office and officers' salaries 58,800 Supplies 24.560 Miscellaneous administrative expense 24,140
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