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 Fixed Cost Estimated Variable Cost (per unit sold) Production costs: Direct materials $13 Direct labor 9 Factory overhead $212,900 6 Selling expenses: Sales salaries and commissions 44,200 3 Advertising 15,000 Travel 3,300 Miscellaneous selling expense 3,700 3 Administrative expenses: Office and officers' salaries 43,200 Supplies 5,300 1 Miscellaneous administrative expense 5,040 1 Total $332,640 $36 It is expected that 7,260 units will be sold at a price of $120 a unit. Maximum sales within the relevant range are 9,000 units. Required: 1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 $fill in the blank e1eeb4000052faa_2 Cost of goods sold: $fill in the blank e1eeb4000052faa_4 fill in the blank e1eeb4000052faa_6 fill in the blank e1eeb4000052faa_8 Cost of goods sold fill in the blank e1eeb4000052faa_9 Gross profit $fill in the blank e1eeb4000052faa_10 Expenses: Selling expenses: $fill in the blank e1eeb4000052faa_12 fill in the blank e1eeb4000052faa_14 fill in the blank e1eeb4000052faa_16 fill in the blank e1eeb4000052faa_18 Total selling expenses $fill in the blank e1eeb4000052faa_19 Administrative expenses: $fill in the blank e1eeb4000052faa_21 fill in the blank e1eeb4000052faa_23 fill in the blank e1eeb4000052faa_25 Total administrative expenses fill in the blank e1eeb4000052faa_26 Total expenses fill in the blank e1eeb4000052faa_27 Income from operations $fill in the blank e1eeb4000052faa_28 2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 8fde3c07e068046_1 % 3. Determine the break-even sales in units and dollars. Units fill in the blank 8fde3c07e068046_2 units Dollars fill in the blank 8fde3c07e068046_3 units

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 Fixed Cost Estimated Variable Cost (per unit sold) Production costs: Direct materials $13 Direct labor 9 Factory overhead $212,900 6 Selling expenses: Sales salaries and commissions 44,200 3 Advertising 15,000 Travel 3,300 Miscellaneous selling expense 3,700 3 Administrative expenses: Office and officers' salaries 43,200 Supplies 5,300 1 Miscellaneous administrative expense 5,040 1 Total $332,640 $36 It is expected that 7,260 units will be sold at a price of $120 a unit. Maximum sales within the relevant range are 9,000 units. Required: 1. Prepare an estimated income statement for 20Y7. Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 $fill in the blank e1eeb4000052faa_2 Cost of goods sold: $fill in the blank e1eeb4000052faa_4 fill in the blank e1eeb4000052faa_6 fill in the blank e1eeb4000052faa_8 Cost of goods sold fill in the blank e1eeb4000052faa_9 Gross profit $fill in the blank e1eeb4000052faa_10 Expenses: Selling expenses: $fill in the blank e1eeb4000052faa_12 fill in the blank e1eeb4000052faa_14 fill in the blank e1eeb4000052faa_16 fill in the blank e1eeb4000052faa_18 Total selling expenses $fill in the blank e1eeb4000052faa_19 Administrative expenses: $fill in the blank e1eeb4000052faa_21 fill in the blank e1eeb4000052faa_23 fill in the blank e1eeb4000052faa_25 Total administrative expenses fill in the blank e1eeb4000052faa_26 Total expenses fill in the blank e1eeb4000052faa_27 Income from operations $fill in the blank e1eeb4000052faa_28 2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 8fde3c07e068046_1 % 3. Determine the break-even sales in units and dollars. Units fill in the blank 8fde3c07e068046_2 units Dollars fill in the blank 8fde3c07e068046_3 units

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...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

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 Fixed Cost		Estimated Variable Cost (per unit sold)
Production costs:
	Direct materials			$13
	Direct labor			9
	Factory overhead	$212,900			6
Selling expenses:
	Sales salaries and commissions	44,200			3
	Advertising	15,000
	Travel	3,300
	Miscellaneous selling expense	3,700			3
Administrative expenses:
	Office and officers' salaries	43,200
	Supplies	5,300			1
	Miscellaneous administrative expense	5,040			1
	Total	$332,640			$36

It is expected that 7,260 units will be sold at a price of $120 a unit. Maximum sales within the relevant range are 9,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

Belmain Co.
Estimated Income Statement
For the Year Ended December 31, 20Y7
			$fill in the blank e1eeb4000052faa_2
Cost of goods sold:
		$fill in the blank e1eeb4000052faa_4
		fill in the blank e1eeb4000052faa_6
		fill in the blank e1eeb4000052faa_8
Cost of goods sold			fill in the blank e1eeb4000052faa_9
Gross profit			$fill in the blank e1eeb4000052faa_10
Expenses:
Selling expenses:
	$fill in the blank e1eeb4000052faa_12
	fill in the blank e1eeb4000052faa_14
	fill in the blank e1eeb4000052faa_16
	fill in the blank e1eeb4000052faa_18
Total selling expenses		$fill in the blank e1eeb4000052faa_19
Administrative expenses:
	$fill in the blank e1eeb4000052faa_21
	fill in the blank e1eeb4000052faa_23
	fill in the blank e1eeb4000052faa_25
Total administrative expenses		fill in the blank e1eeb4000052faa_26
Total expenses			fill in the blank e1eeb4000052faa_27
Income from operations			$fill in the blank e1eeb4000052faa_28

2. What is the expected contribution margin ratio? Round to the nearest whole percent.
fill in the blank 8fde3c07e068046_1 %

3. Determine the break-even sales in units and dollars.

Units	fill in the blank 8fde3c07e068046_2 units
Dollars	fill in the blank 8fde3c07e068046_3 units

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$ fill in the blank 8fde3c07e068046_4

5. What is the expected margin of safety in dollars and as a percentage of sales?

Dollars:	$fill in the blank 8fde3c07e068046_5
Percentage: (Round to the nearest whole percent.)	fill in the blank 8fde3c07e068046_6	%

6. Determine the operating leverage. Round to one decimal place.
fill in the blank 8fde3c07e068046_7

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.