4 Blue company has prepared the following contribution format income statement basedon a sales volume of 1,000 units (the relevant range of production is 500 to 1,500 units): 5 6 7 Sales 8 Variable expenses 9 Contribution margin $ 20,000 12,000 8,000 10 Fixed expenses 6,000 11 Net operating income $ 2,000 12 13 Questions: 14 15 1. What is the contribution margin per unit? 16 2. What is the contribution margin ratio? 17 3. What is the variable expense ratio? 18 4. If sales increase to 1,001 units, what would be the increase in net operating income? 19 5. If sales decline to 900 units, what would be the net operating income? 20 6. If the selling price increases by $2 per unit and thes ales volume decreases by 100 units, what would be the net operating income? 21 7. If the variable cost per unit increases by $1, spending on advertising incrases by $1,500, and unit sales incrase by 250 units, what would be the net operating income? 22 8. What is the break-even point in unit sales? 23 9. What is the break-even point in dollar sales? 24 10. How many units must be sold to achieve a target profit of $5,000? 25 11. What is the margin of safety in dollars? 26 12. What is the degree of operating leverage? 27