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 Direct labor $15 Factory overhead $203,200 42,200 Selling expenses Sales salaries and commissions Advertising Travel 14,300 3,200 Miscellaneous selling expense 3,500 Administrative expenses: Office and officers' salaries 41,300 5,100 Supplies Miscellaneous administrative expense 4,720

Answer 1

Estimated Income statement for 2017 1) 1128960 Sales (6120x166) (424960) 704000 Cost of goods sold Direct Materials (6720x15) Direct Labout = 67200 (612 cxlc) Factory creohead (6720 x81 203200) .256960 Total cost of goods sold Googg Poolit Expenses Selling expense Salery & Commision. +62360 U(42200 13 x672) AdveshBly • 14300 travel - 3200 Miscellaneous expense (6720x3435cc) = 23660 Ictal Selling exponse (103520)

Lukmes per Adminisholm expense ofhce dofhiles's Baby - Supplies Miscalbrems Adm espenses 413co 5lco 4720 Total Adm eep (51120) (15464) Total expenses (61120H16352) operating income. 5493 60 (Cocos sant Alor - 154640 ) 4000 (tatal exp) - 139690) Contribution Mergin salio - Contribulien Morgin per unit I em Sales/n oobletst Contosbuchen Margin - 168.15-le-8 (Bols - voiable col) = 135.$ lomake Contrbuhen Margin = 135 - 80% 710 166 B612

6) Break even Sales in units Eted est Come buken Mingin / unit 317520 135 = 232 units Break even Rules Ruleg fixed Cost Contributen Morgen saha 31752 80.354 - 3951114 Sales (3) Nogin of Bality - Expected Bales Break even sales Expected = 168x6126 = 1128960 Mogin of solely - 112896€ - 39511) J -733789.b noran of salet y los % of sales row. 733189 /128960 xleo -65% (6) Operating leverage units gold x (sales pole lonid- Variable clonal) units seld x (Salesl unit-v.clunil)-fixed ope « 6720x (168-33) - 1.29 = 1.3 (6720x[169-31)- 203200

chaol. helal moo 1128 960 112694 $ Shooof 10.000 qoccer Cocco Total revenup. LICA 1.0000 booode (539 ) 5000001 400000 (1526) 3000C 20000 Loreak even Point letal Cest. loooo 01 loco Unit) 26282300 500 4000, Unha Beldoor Goco 1.00 (61200nita Beld. (break even sales in Tolaloevenue = 6120x168: 1128960 Tchal leghe fixed cost treriable lest 5397807221160 2539260