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 to 1,500 units):

Sales	$	75,000
Variable expenses		45,000
Contribution margin		30,000
Fixed expenses		22,800
Net operating income	$	7,200

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 $1,650, and unit sales increase by 230 units, what would be the net operating income?

8. What is the break-even point in unit sales?

Answer 1