Contribution Hargin, 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: Estimated Variable Cost Estimated (per Fixed unit Cost sold) Production costs: Direct materials $19 ) Direct labor 13 Factory overhead $209,300 10 Selling expenses: Sales salaries and commissions 60,100 Advertising 20,300 Travel 4,500 Miscellaneous selling expense 5,000 Administrative expenses: Ofice and officers' salaries 58,00 Supplies 7,200 Miscellaneous administrative expense 6,780 Total $451,900 $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

Contribution Hargin, 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: Estimated Variable Cost Estimated (per Fixed unit Cost sold) Production costs: Direct materials $19 ) Direct labor 13 Factory overhead $209,300 10 Selling expenses: Sales salaries and commissions 60,100 Advertising 20,300 Travel 4,500 Miscellaneous selling expense 5,000 Administrative expenses: Ofice and officers' salaries 58,00 Supplies 7,200 Miscellaneous administrative expense 6,780 Total $451,900 $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

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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Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?
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