Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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: 1 Estimated Fixed CostEstimated Variable Cost (per unit sold)2Production costs: 3Direct materials—$46.004Direct labor—40.005Factory overhead$200,000.0020.006Selling expenses: 7Sales salaries and commissions110,000.008.008Advertising40,000.00—9Travel12,000.00—10Miscellaneous selling expense7,600.001.0011Administrative expenses: 12Office and officers’ salaries132,000.00—13Supplies10,000.004.0014Miscellaneous administrative expense13,400.001.0015Total$525,000.00$120.00 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. Required:A.Prepare an estimated income statement for 20Y8. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.B.What is the expected contribution margin ratio?C.Determine the break-even sales in units and dollars.D.Construct a cost-volume-profit chart on your own paper. What is the break-even sales?E.What is the expected margin of safety in dollars and as a percentage of sales?F.Determine the operating leverage. Round to one decimal place. Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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:12 Production costs:Direct materialsDirect labor5 Factory overhead6 Selling expenses:7 Sales salaries and commissions348 Advertising9 Travel10 Miscellaneous selling expense11 Administrative expenses:12 Office and officers' salaries13 Supplies14 Miscellaneous administrative expense15TotalEstimated FixedCost$200,000.00110,000.0040,000.0012,000.007,600.00132,000.0010,000.0013,400.00$525,000.00EstimatedVariable Cost (perunit sold)$46.0040.0020.008.001.004.001.00$120.00It 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.Required:A. Prepare an estimated income statement for 20Y8. Refer to the Labels and Amount Descriptions list provided for the exact wording of theanswer choices for text entries. Be sure to complete the statement heading.B. What is the expected contribution margin ratio?C. Determine the break-even sales in units and dollars.D. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?E. What is the expected margin of safety in dollars and as a percentage of sales?F. Determine the operating leverage. Round to one decimal place.

The revenues and expenses of the business for a specific time period are displayed on the income…

Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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: 1 Estimated Fixed Cost Estimated Variable Cost (per unit sold) 2 Production costs: 3 Direct materials — $46.00 4 Direct labor — 40.00 5 Factory overhead $200,000.00 20.00 6 Selling expenses: 7 Sales salaries and commissions 110,000.00 8.00 8 Advertising 40,000.00 — 9 Travel 12,000.00 — 10 Miscellaneous selling expense 7,600.00 1.00 11 Administrative expenses: 12 Office and officers’ salaries 132,000.00 — 13 Supplies 10,000.00 4.00 14 Miscellaneous administrative expense 13,400.00 1.00 15 Total $525,000.00 $120.00 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. Required: A. Prepare an estimated income statement for 20Y8. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. B. What is the expected contribution margin ratio? C. Determine the break-even sales in units and dollars. D. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? E. What is the expected margin of safety in dollars and as a percentage of sales? F. Determine the operating leverage. Round to one decimal place.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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:

1		Estimated Fixed Cost	Estimated Variable Cost (per unit sold)
2	Production costs:
3	Direct materials	—	$46.00
4	Direct labor	—	40.00
5	Factory overhead	$200,000.00	20.00
6	Selling expenses:
7	Sales salaries and commissions	110,000.00	8.00
8	Advertising	40,000.00	—
9	Travel	12,000.00	—
10	Miscellaneous selling expense	7,600.00	1.00
11	Administrative expenses:
12	Office and officers’ salaries	132,000.00	—
13	Supplies	10,000.00	4.00
14	Miscellaneous administrative expense	13,400.00	1.00
15	Total	$525,000.00	$120.00

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.

	Required:
A.	Prepare an estimated income statement for 20Y8. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.
B.	What is the expected contribution margin ratio?
C.	Determine the break-even sales in units and dollars.
D.	Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
E.	What is the expected margin of safety in dollars and as a percentage of sales?
F.	Determine the operating leverage. Round to one decimal place.

Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 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:
1
2 Production costs:
Direct materials
Direct labor
5 Factory overhead
6 Selling expenses:
7 Sales salaries and commissions
3
4
8 Advertising
9 Travel
10 Miscellaneous selling expense
11 Administrative expenses:
12 Office and officers' salaries
13 Supplies
14 Miscellaneous administrative expense
15
Total
Estimated Fixed
Cost
$200,000.00
110,000.00
40,000.00
12,000.00
7,600.00
132,000.00
10,000.00
13,400.00
$525,000.00
Estimated
Variable Cost (per
unit sold)
$46.00
40.00
20.00
8.00
1.00
4.00
1.00
$120.00
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.
Required:
A. Prepare an estimated income statement for 20Y8. Refer to the Labels and Amount Descriptions list provided for the exact wording of the
answer choices for text entries. Be sure to complete the statement heading.
B. What is the expected contribution margin ratio?
C. Determine the break-even sales in units and dollars.
D. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
E. What is the expected margin of safety in dollars and as a percentage of sales?
F. Determine the operating leverage. Round to one decimal place.

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