Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating LeverageBelmain 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 thereforeassumed 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 duringthe year. A summary report of these estimates is as follows:EstimatedEstimated Variable CostFixed Cost(per unit sold)Production costs:Direct materials$15Direct labor10Factory overhead$451,600Selling expenses:Sales salaries and commissions93,800Advertising31,800Travel7,100Miscellaneous selling expense7,800Administrative expenses:Office and officers' salaries91,700Supplies11,300Miscellaneous administrative expense10,500Total$705,600$42It is expected that 10,800 units will be sold at a price of $140 a unit. Maximum sales within the relevant range are 14,000 units.Required:NextMacBook AirM II m 2. What is the expected contribution margin ratio? Round to the nearest whole percent.3. Determine the break-even sales in units and dollars.UnitsunitsDollars4. 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.All work saved.

Formula used: Break-even sales (units) = Fixed cost/ Contribution per unit Break-even sales…

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.

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.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating...

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