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 $17 Direct labor 12 Factory overhead $909,300 9 Selling expenses: Sales salaries and commissions 189,000 4 Advertising 63,900 Travel 14,200 Miscellaneous selling expense 15,600 3 Administrative expenses: Office and officers' salaries 184,700 Supplies 22,700 1 Miscellaneous administrative expense 21,400 2 Total $1,420,800 $48 It is expected that 11,100 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 14,000 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 b7fbb700a047fd6_2 Cost of goods sold: $fill in the blank b7fbb700a047fd6_4 fill in the blank b7fbb700a047fd6_6 fill in the blank b7fbb700a047fd6_8 Cost of goods sold fill in the blank b7fbb700a047fd6_9 Gross profit $fill in the blank b7fbb700a047fd6_10 Expenses: Selling expenses: $fill in the blank b7fbb700a047fd6_12 fill in the blank b7fbb700a047fd6_14 fill in the blank b7fbb700a047fd6_16 fill in the blank b7fbb700a047fd6_18 Total selling expenses $fill in the blank b7fbb700a047fd6_19 Administrative expenses: $fill in the blank b7fbb700a047fd6_21 fill in the blank b7fbb700a047fd6_23 fill in the blank b7fbb700a047fd6_25 Total administrative expenses fill in the blank b7fbb700a047fd6_26 Total expenses fill in the blank b7fbb700a047fd6_27 Income from operations $fill in the blank b7fbb700a047fd6_28 2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 1ca70afe8ff7fdc_1 % 3. Determine the break-even sales in units and dollars. Units fill in the blank 1ca70afe8ff7fdc_2 units Dollars fill in the blank 1ca70afe8ff7fdc_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 $17 Direct labor 12 Factory overhead $909,300 9 Selling expenses: Sales salaries and commissions 189,000 4 Advertising 63,900 Travel 14,200 Miscellaneous selling expense 15,600 3 Administrative expenses: Office and officers' salaries 184,700 Supplies 22,700 1 Miscellaneous administrative expense 21,400 2 Total $1,420,800 $48 It is expected that 11,100 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 14,000 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 b7fbb700a047fd6_2 Cost of goods sold: $fill in the blank b7fbb700a047fd6_4 fill in the blank b7fbb700a047fd6_6 fill in the blank b7fbb700a047fd6_8 Cost of goods sold fill in the blank b7fbb700a047fd6_9 Gross profit $fill in the blank b7fbb700a047fd6_10 Expenses: Selling expenses: $fill in the blank b7fbb700a047fd6_12 fill in the blank b7fbb700a047fd6_14 fill in the blank b7fbb700a047fd6_16 fill in the blank b7fbb700a047fd6_18 Total selling expenses $fill in the blank b7fbb700a047fd6_19 Administrative expenses: $fill in the blank b7fbb700a047fd6_21 fill in the blank b7fbb700a047fd6_23 fill in the blank b7fbb700a047fd6_25 Total administrative expenses fill in the blank b7fbb700a047fd6_26 Total expenses fill in the blank b7fbb700a047fd6_27 Income from operations $fill in the blank b7fbb700a047fd6_28 2. What is the expected contribution margin ratio? Round to the nearest whole percent. fill in the blank 1ca70afe8ff7fdc_1 % 3. Determine the break-even sales in units and dollars. Units fill in the blank 1ca70afe8ff7fdc_2 units Dollars fill in the blank 1ca70afe8ff7fdc_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...

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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			$17
	Direct labor			12
	Factory overhead	$909,300			9
Selling expenses:
	Sales salaries and commissions	189,000			4
	Advertising	63,900
	Travel	14,200
	Miscellaneous selling expense	15,600			3
Administrative expenses:
	Office and officers' salaries	184,700
	Supplies	22,700			1
	Miscellaneous administrative expense	21,400			2
	Total	$1,420,800			$48

It is expected that 11,100 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 14,000 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 b7fbb700a047fd6_2
Cost of goods sold:
		$fill in the blank b7fbb700a047fd6_4
		fill in the blank b7fbb700a047fd6_6
		fill in the blank b7fbb700a047fd6_8
Cost of goods sold			fill in the blank b7fbb700a047fd6_9
Gross profit			$fill in the blank b7fbb700a047fd6_10
Expenses:
Selling expenses:
	$fill in the blank b7fbb700a047fd6_12
	fill in the blank b7fbb700a047fd6_14
	fill in the blank b7fbb700a047fd6_16
	fill in the blank b7fbb700a047fd6_18
Total selling expenses		$fill in the blank b7fbb700a047fd6_19
Administrative expenses:
	$fill in the blank b7fbb700a047fd6_21
	fill in the blank b7fbb700a047fd6_23
	fill in the blank b7fbb700a047fd6_25
Total administrative expenses		fill in the blank b7fbb700a047fd6_26
Total expenses			fill in the blank b7fbb700a047fd6_27
Income from operations			$fill in the blank b7fbb700a047fd6_28

2. What is the expected contribution margin ratio? Round to the nearest whole percent.
fill in the blank 1ca70afe8ff7fdc_1 %

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

Units	fill in the blank 1ca70afe8ff7fdc_2 units
Dollars	fill in the blank 1ca70afe8ff7fdc_3 units

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$ fill in the blank 1ca70afe8ff7fdc_4

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

Dollars:	$fill in the blank 1ca70afe8ff7fdc_5
Percentage: (Round to the nearest whole percent.)	fill in the blank 1ca70afe8ff7fdc_6	%

6. Determine the operating leverage. Round to one decimal place.
fill in the blank 1ca70afe8ff7fdc_7

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