ety, and operating leverageDreak-even sales, cost-volume-profit chart,Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 as atthe beginning of the year. The total of all production costs for the year is therefore assumedto be equal to the cost of goods sold. With this in mind, the various department headswere asked to submit estimates of the costs for their departments during the year.A summary report of these estimates is as follows:2. 25%OBJ. 2, 3, 4, 5EstimatedFixed CostProduction costs:Estimated Variable Cost(per unit sold)I.000,250 Direct materials. . . . .75o00 Direct laboric37,000 Factory overhead.....$ 462rg75 x7040Selling expenses:$200,00020000020285000 Sales salaries and commissions. ..yooco Advertising.....110,000812oCo Travel40,000arolt2 es eeS.E29475 Miscellaneous selling expense...12,000Administrative expenses:7,6001132000Office and officers' salaries.....132,000Supplies.....Miscellaneous administrative expense..9758010,00013,4001Total ....$525,000$120-Sales3,500,000It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum saleswithin the relevant range are 27,000 units.Instructions350 0002. What is the expected contribution margin ratio? 5.0.1. Prepare an estimated income statement for 2016.3. Determine the break-even sales in units and dollars.UNit-13125ddlar- 2,100,0004.Construct a cost-volume-profit chart indicating the break-even sales.5. What is the expected margin of safety in dollars and as a percentage of sales?1900 00040.0'106. Determine the operating leverage. -- 2.5

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Asked Dec 3, 2019
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ety, and operating leverage
Dreak-even sales, cost-volume-profit chart,
Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 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:
2. 25%
OBJ. 2, 3, 4, 5
Estimated
Fixed Cost
Production costs:
Estimated Variable Cost
(per unit sold)
I.000,250 Direct materials. . . . .
75o00 Direct labor
ic37,000 Factory overhead.....
$ 46
2rg75 x70
40
Selling expenses:
$200,000
200000
20
285000 Sales salaries and commissions. ..
yooco Advertising.....
110,000
8
12oCo Travel
40,000
arolt
2 es e
eS.E
29475 Miscellaneous selling expense...
12,000
Administrative expenses:
7,600
1
132000Office and officers' salaries.....
132,000
Supplies.....
Miscellaneous administrative expense..
97580
10,000
13,400
1
Total ....
$525,000
$120-
Sales
3,500,000
It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales
within the relevant range are 27,000 units.
Instructions
350 000
2. What is the expected contribution margin ratio? 5.0.
1. Prepare an estimated income statement for 2016.
3. Determine the break-even sales in units and dollars.
UNit-13125ddlar- 2,100,000
4.
Construct a cost-volume-profit chart indicating the break-even sales.
5. What is the expected margin of safety in dollars and as a percentage of sales?
1900 000
40.0'10
6. Determine the operating leverage. -- 2.5
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ety, and operating leverage Dreak-even sales, cost-volume-profit chart, Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 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: 2. 25% OBJ. 2, 3, 4, 5 Estimated Fixed Cost Production costs: Estimated Variable Cost (per unit sold) I.000,250 Direct materials. . . . . 75o00 Direct labor ic37,000 Factory overhead..... $ 46 2rg75 x70 40 Selling expenses: $200,000 200000 20 285000 Sales salaries and commissions. .. yooco Advertising..... 110,000 8 12oCo Travel 40,000 arolt 2 es e eS.E 29475 Miscellaneous selling expense... 12,000 Administrative expenses: 7,600 1 132000Office and officers' salaries..... 132,000 Supplies..... Miscellaneous administrative expense.. 97580 10,000 13,400 1 Total .... $525,000 $120- Sales 3,500,000 It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units. Instructions 350 000 2. What is the expected contribution margin ratio? 5.0. 1. Prepare an estimated income statement for 2016. 3. Determine the break-even sales in units and dollars. UNit-13125ddlar- 2,100,000 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? 1900 000 40.0'10 6. Determine the operating leverage. -- 2.5

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A Wolsey Industries Estimated income statement 2 2016 3 Amount (S) 21875*160 Particulars 4 5 Sales 6 Less: COGS -21875*46 7 Direct Material 8 Direct Labor 9 Factory Overhead 10 Operating income 11 Less: Expenses 21875*40 200000 (21875*20) B5-SUM(B7:B9) 12 Selling expenses: 13 Sales salaries and commissions |=110000+(21875*8) 7600+(21875*1) 14 Miscellaneous selling expenses 15 Administration Expense: 16 Supplies 17 Miscellaneous administration expense 13400+(21875*1) 18 Less: Fixed expenses 19 Advertising |=10000+(21875 *4) 40000 20 Travel 12000 21 Office and officers' salary 132000 22 Net operating income -B10-SUM(B13:B21)

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