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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 | $ 40,000 |
Variable expenses | 26,000 |
Contribution margin | 14,000 |
Fixed expenses | 8,680 |
Net operating income | $ 5,320 |
- What is the margin of safety in dollars? What is the margin of safety percentage?
- What is the degree of operating leverage? (Round your answer to 2 decimal places.)
- Using the degree of operating leverage, what is the estimated percent increase in net operating income that would result from a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)
- Assume that the amounts of the companys total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,680 and the total fixed expenses are $26,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?
- Assume that the amounts of the companys total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,680 and the total fixed expenses are $26,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)
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