1. Belmain Co. expects to maintain the same inventories at the endof 20Y7 as at the beginning of the year. The total of allproduction costs for the year is therefore assumed to be equal tothe cost of goods sold. With this in mind, the various departmentheads were asked to submit estimates of the costs for theirdepartments during the year. A summary report of these estimates isas follows:

   		Estimated Fixed Cost			Estimated Variable Cost (per unit sold)
   Production costs:
   	Direct materials				$26
   	Direct labor				17
   	Factory overhead	$114,300			13
   Selling expenses:
   	Sales salaries and commissions	23,700			6
   	Advertising	8,000
   	Travel	1,800
   	Miscellaneous selling expense	2,000			5
   Administrative expenses:
   	Office and officers' salaries	23,200
   	Supplies	2,900			2
   	Miscellaneous administrative expense	2,660			3
   	Total	$178,560			$72

   It is expected that 5,580 units will be sold at a price of $144a unit. Maximum sales within the relevant range are 7,000units.

   Required:

   1. Prepare an estimated income statement for20Y7.

   Belmain Co.
   Estimated Income Statement
   For the Year Ended December 31, 20Y7
   			$
   Cost of goods sold:
   		$
   Cost of goods sold
   Gross profit			$
   Expenses:
   Selling expenses:
   	$
   Total selling expenses		$
   Administrative expenses:
   	$
   Total administrative expenses
   Total expenses
   Income from operations			$

   2. What is the expected contribution marginratio? Round to the nearest whole percent.
   %

   3. Determine the break-even sales in units anddollars.

   Units	units
   Dollars	units

   4. Construct a cost-volume-profit chart on yourown paper. What is the break-even sales?
   $

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

   Dollars:	$
   Percentage: (Round to the nearest whole percent.)		%

   6. Determine the operating leverage. Round toone decimal place.