In: Accounting
Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 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: |
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3 |
Direct materials |
— |
$46.00 |
4 |
Direct labor |
— |
40.00 |
5 |
Factory overhead |
$200,000.00 |
20.00 |
6 |
Selling expenses: |
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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: |
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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: | |
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1. | Prepare an estimated income statement for 20Y3. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all amounts as positive values. |
2. | What is the expected contribution margin ratio? |
3. | Determine the break-even sales in units and dollars. |
4. | Construct a cost-volume-profit chart on your own paper. What is the break-even sales? |
5. | What is the expected margin of safety in dollars and as a percentage of sales? |
6. | Determine the operating leverage. Round to one decimal place. |
Labels and Amount Descriptions
Labels and Amount Descriptions | |
Advertising | |
Contribution margin | |
Cost of goods sold | |
Direct labor | |
Direct materials | |
Expenses | |
Factory overhead | |
Gross profit | |
Income from operations | |
Manufacturing margin | |
Miscellaneous administrative expense | |
Miscellaneous selling expense | |
Office and officers’ salaries | |
Sales | |
Sales salaries and commissions | |
Supplies | |
Total administrative expenses | |
Total cost of goods sold | |
Total expenses | |
Total selling expenses | |
Travel | |
Variable cost of goods sold |
Income Statement
Shaded cells have feedback.
1. Prepare an estimated income statement for 20Y3. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all amounts as positive values.
Question not attempted.
Score: 0/152
Wolsey Industries Inc. |
Estimated Income Statement |
For the Year Ended December 31, 20Y3 |
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Selling expenses: |
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Administrative expenses: |
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Total expenses |
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21 |