Chapter 5 Foundational 15 Oslo Company prepared the following contribution margin format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 to 1,500 units): Sales $ 20,000 $ 20 Variable expenses 12,000 S 12 60% Contribution margin 8,000 $ 40% Fixed expenses 6,000 Net operating income $ 2,000 8 4 5 8 1 What is the contribution margin per unit 2 What is the contrubution margin ratio? 3 What is the variable expense ratio? If sales increased to 1,001 units, what would be the increase in net operating income? If sales decline to 900 units, what would be the net operating income? 6 If the selling price increases by S2 per unit and the sales volume decreases by 100 units, what would the net operating income be: 7 If the variable cost per unit increases by Si, spending on advertising increases by $1,500 and unit sales increase by 250 units, what would be the net operating income? What is the break even point in unit sales? 9. What is the break even point in dollar sales? 10 How many units must be sold to achieve a target profit of $5,000? 11. What is the margin of safety in dollars? What is the margin of safety percentage? 12 What is the degree of operating leverage? 13 Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? 14 Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $6000 and the total fixed expenses are $12,000 Under this scenario and assuming that the total sales remain the same, what is the degree of operating leverage? 15 Using the degree of operating leverage that you computed in the previous question, what is the estimated percent increase in net operating income of a 5% increase in sales