Chap 8 ACC2313

1.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

23,600

Variable expenses

13,200

Contribution margin

10,400

Fixed expenses

7,592

Net operating income

$

2,808

Required:

What is the contribution margin per unit?(Round your answer to 2 decimal places.)

2.Nick prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

23,000

Variable expenses

13,000

Contribution margin

10,000

Fixed expenses

8,500

Net operating income

$

1,500

Required:

What is the contribution margin ratio?(Round your answer to 2 decimal places.)

3.income statement based on a sales volume of 1,000 units (the relevant rangeIof production is 500 units to 1,500 units):

Sales

$

26,000

Variable expenses

14,000

Contribution margin

12,000

Fixed expenses

7,800

Net operating income

$

4,200

Required:

What is the variable expense ratio?(Round your answer to 2 decimal places.)

4.Cena's income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

24,500

Variable expenses

13,500

Contribution margin

11,000

Fixed expenses

7,700

Net operating income

$

3,300

Required:

If sales increased to 1,001 units, what would be the increase in net operating income?(Round your answer to 2 decimal places.)

5.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

20,300

Variable expenses

12,100

Contribution margin

8,200

Fixed expenses

6,232

Net operating income

$

1,968

Required:

If sales declined to 900 units, what would be the net operating income?(Do not round intermediate calculations.)

6.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

21,800

Variable expenses

12,600

Contribution margin

9,200

Fixed expenses

7,452

Net operating income

$

1,748

Required:

If the selling price increased by $1.90 per unit and the sales volume decreased by 100 units, what would be the net operating income?(Do not round intermediate calculations.)

7.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

24,500

Variable expenses

13,500

Contribution margin

11,000

Fixed expenses

7,700

Net operating income

$

3,300

Required:

If the variable cost per unit increased by $1.50, spending on advertising increased by $2,000, and unit sales increased by 250 units, what would be the net operating income?(Do not round intermediate calculations.)

8.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

20,300

Variable expenses

12,100

Contribution margin

8,200

Fixed expenses

6,232

Net operating income

$

1,968

Required:

What is the break-even point in unit sales?(Do not round intermediate calculations.)

9.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

26,000

Variable expenses

14,000

Contribution margin

12,000

Fixed expenses

7,800

Net operating income

$

4,200

Required:

What is the break-even point in sales dollars?(Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

10. Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

23,300

Variable expenses

13,100

Contribution margin

10,200

Fixed expenses

7,548

Net operating income

$

2,652

Required:

How many units must be sold to achieve a target profit of $6,426?(Do not round intermediate calculations.)

11.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

23,600

Variable expenses

13,200

Contribution margin

10,400

Fixed expenses

7,592

Net operating income

$

2,808

Required:

a.What is the margin of safety in dollars?(Do not round intermediate calculations.)

b.What is the margin of safety percentage?

12.Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

22,700

Variable expenses

12,900

Contribution margin

9,800

Fixed expenses

8,232

Net operating income

$

1,568

Required:

What is the degree of operating leverage?(Round your answer to 2 decimal places.)

13. Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

25,400

Variable expenses

13,800

Contribution margin

11,600

Fixed expenses

7,772

Net operating income

$

3,828

Required:

Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

14. Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales

$

25,100

Variable expenses

13,700

Contribution margin

11,400

Fixed expenses

7,752

Net operating income

$

3,648

Required:

Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 3% increase in sales?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

15.If the fixed expenses of a product increase while variable expenses and the selling price remain constant, what will happen to the total contribution margin and the break-even point?

Contribution margin

Break-even point

A.

Increase

Decrease

B.

Decrease

Increase

C.

Unchanged

Increase

D.

Unchanged

Unchanged

Top of Form

Multiple Choice

Bottom of Form

Choice A

Choice B

Choice C

Choice D