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
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 | $ | 50,000 |
Variable expenses | 27,500 | |
Contribution margin | 22,500 | |
Fixed expenses | 14,850 | |
Net operating income | $ | 7,650 |
Required:
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 $1,400, and unit sales increase by 180 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 $13,500?
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.)
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