Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units
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Question:
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$15,000Variable expenses9,000Contribution margin6,000Fixed expenses3,120Net operating income$2,880
5. If sales decline to 900 units, what would be the net operating income?
Answered by Expert Tutors
Net operating income is $2,280.
Step-by-step explanation
Sales price = $15,000 1000 = $15
Variable cost = $9,000 1000 = $9
Net operating income is computed using the equation given below:
Net operating income = Sales - Variable cost - Fixed cost
= {900 $15} - {900 $9} - $3,120
= $13,500 - $8,100 - $3,120
= $2,280.
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