Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[ The following information applies to the questions displayed below. ] Oslo Company prepared the following contribution format income statement based on a sales volume

[The following information applies to the questions displayed below.]
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 $ 55,000
Variable expenses 33,000
Contribution margin 22,000
Fixed expenses 14,960
Net operaContribution Margin 22,000
Sales Volume 1,000
Contribution Margin Per Unit 22
3. What is the variable expense ratio?
4. If sales increase to 1,001 units, what would be the increase in net operating income?
5.If sales decline to 900 units, what would be the net operating income?
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 $1,450, and unit sales increase by 190 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 $13,200?
11.What is the margin of safety in dollars? What is the margin of safety percentage?
12. What is the degree of operating leverage?
13.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?
14.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 $14,960 and the total fixed expenses are $33,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?
15.. 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 $14,960 and the total fixed expenses are $33,000. 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

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

Managerial Accounting

Authors: Ronald W Hilton

7th Edition

0073022853, 978-0073022857

More Books

Students also viewed these Accounting questions