Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 45,000
Variable expenses 31,500
Contribution margin 13,500
Fixed expenses 8,640
Net operating income $ 4,860

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

2. What is the contribution margin ratio?

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

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?

7. If the variable cost per unit increases by $1, spending on advertising increases by $1,350, and unit sales increase by 170 units, what would be the net operating income?

8. 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 $8,100?

11. What is the margin of safety in dollars? What is the margin of safety percentage?

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

13. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? (Round your intermediate calculations and final answer to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Introductory Financial Accounting For Business

Authors: Thomas P. Edmonds, Christopher Edmonds

2nd Edition

1260575306, 9781260575309

More Books

Students also viewed these Accounting questions

Question

Summarize the economic impact of safety.

Answered: 1 week ago

Question

Summarize the prevalence of unions.

Answered: 1 week ago