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 2017 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: Production costs: Direct materials Direct labor Factory overhead Selling expenses: Sales salaries and commissions Advertising Travel P Miscellaneous selling expense miscama Administrative expenses! Office and officers' salaries Supplies Miscellaneous administrative expense Estimated Fixed Cost $969,800 201,500 68.200 15,200 16,700 197,000 24,200 22,760 Estimated Variable Cost (per unit sold) $24 16 12 5 2 3 Total $1,515,360 $66 It is expected that 9.840 units will be sold at a price of $330 a unit. Maximum sales within the relevant range are 12.000 units. Required:
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 2017 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: Production costs: Direct materials Direct labor Factory overhead Selling expenses: Sales salaries and commissions Advertising Travel P Miscellaneous selling expense miscama Administrative expenses! Office and officers' salaries Supplies Miscellaneous administrative expense Estimated Fixed Cost $969,800 201,500 68.200 15,200 16,700 197,000 24,200 22,760 Estimated Variable Cost (per unit sold) $24 16 12 5 2 3 Total $1,515,360 $66 It is expected that 9.840 units will be sold at a price of $330 a unit. Maximum sales within the relevant range are 12.000 units. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
do not give solution in images format
Transcribed Image Text:1. Prepare an estimated income statement for 2017.
Belmain Co.
Estimated Income Statement
For the Year Ended December 31, 2017
Cost of goods sold:
Total cost of goods sold
Gross profit
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total expenses
Operating income
2. What is the expected contribution margin ratio? Round to the nearest whole percent.
%
3. Determine the break-even sales in units and dollars.
Units
units
Dollars
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.
%
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:
Production costs:
Direct materials
Direct labor
Factory overhead
Selling expenses:
Sales salaries and commissions
Advertising
Travel
Miscellaneous selling expense
Administrative expenses:
Office and officers' salaries
Supplies
Miscellaneous administrative expense
Total
Estimated
Fixed Cost
$969,800
201,500
68,200
15,200
16,700
197,000
24,200
22,760
Estimated Variable Cost
(per unit sold)
$24
16
12
5
2
3
$1,515,360
It is expected that 9,840 units will be sold at a price of $330 a unit. Maximum sales within the relevant range are 12,000 units.
Required:
$66
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