Foundational 6-3 3. What is the variable expense ratio? Variable expense ratio % Foundational 6-4 4. If sales increase to 1,001 units, what would be the increase in net operating income? Increase in net operating income Foundational 6-5 5. If sales decline to 900 units, what would be the net operating income? Net operating income Foundational 6-6 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? Net operating income Foundational 6-7 7. If the variable cost per unit increases by $1. spending on advertising increases by $1,500, and unit sales increase by 250 units, what would be the net operating income? Net operating income Foundational 6-8 8. What is the break-even point in unit sales? Break-even point units Foundational 6-9 9. What is the break-even point in dollar sales? Break-even point Foundational 6-10 10. How many units must be sold to achieve a target profit of $5,000? Number of units Foundational 6-11 11. What is the margin of safety in dollars? What is the margin of safety percentage? Margin of safety in dollars Margin of safety percentage % Foundational 6-12 12. What is the degree of operating leverage? Degree of operating leverage Foundational 6-13 13. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? % Increase in net operating income Foundational 6-14 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 $6,000 and the total fixed expenses are $12,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? Degree of operating leverage os Foundational 6-15 15. 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 $6,000 and the total fixed expenses are $12,000. Given this scenario and assuming that total sales remain the same. Using the degree of calculated operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? Increase in net operating income % Required information The Foundational 15 (L06-1, LO6-3, L06-4, L06-5, LO6-6, LO6-7, LO6-8] [The following information applies to the questions displayed below.) 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 Variable expenses Contribution margin Fixed expenses Net operating income $ 20,000 12,000 8,000 6,000 $ 2,000 Foundational 6-15
