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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

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

Managerial Accounting
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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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
Transcribed Image Text: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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