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Prepare an estimated income statement for $20Y7.$

Belmain Co$.$

Estimated Income Statement

For the Year Ended December $31,20$Y$7$

What is the expected contribution margin ratio? $($Round to the nearest whole percent.$)$

$\%$

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

Units

units

Dollars $

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

$

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

Dollars $

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

Determine the operating leverage. $($Round to one decimal place.$)$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:

Production costs:

Direct materials

Direct labor

Selling expenses:

Administrative expenses:

It is expected that $6,300$ units will be sold at a price of $$120$ a unit. Maximum sales within the relevant range are $8,000$ units.

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