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 , 0 0 0 units ( the relevant range


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 $ 90,000

Variable expenses 49,500

Contribution margin 40,500

Fixed expenses 33,210

Net operating income $ 7,290

Foundational 5-12(Algo)


Assume the amounts of the companys total variable expenses and total fixed expenses were reversed. In other words, assume the total variable expenses are $33,210 and the total fixed expenses are $49,500. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales?


Step by Step Solution

There are 3 Steps involved in it

Step: 1

ANSWER Step 1 Recalculate Contribution Margin Ratio with Reversed Costs Contribution margin 40500 Sales 90000 Variable expenses originally 49500 now 3... 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_2

Step: 3

blur-text-image_3

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

Introduction to Managerial Accounting

Authors: Peter Brewer, Ray Garrison, Eric Noreen

7th edition

978-1259675539, 125967553X, 978-1259594168, 1259594165, 78025796, 978-0078025792

More Books

Students also viewed these Accounting questions

Question

Find examples of modular design of products in every day life

Answered: 1 week ago

Question

=+1. Describe at least four different sexual orientations.

Answered: 1 week ago