Question

# Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...

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

9.What is the break-even point in dollar sales?

10. How many units must be sold to achieve a target profit of \$18,000?

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.)

• Requirement 9 to 12, all with workings and calculations
 A Contribution margin \$30,000 B Sales \$75,000 C = (A/B) x 100 CM Ratio 40% D Fixed Expenses \$22,800 E = D/E Break even point in dollar sales \$57,000 A Target profits \$18,000 B Fixed Expenses \$22,800 C = A+B Total contribution margin required \$40,800 D = \$ 30000 / 1000 units Contribution margin per unit \$30 E = C/D No. of units required to be sold 1360 A Total Sales \$75,000 B Break even point in dollar sales \$57,000 C = A - B Margin of Safety in dollars \$18,000 D = (C/A) x 100 Margin of Safety % 24% A Contribution margin \$30,000 B Net Operating income \$7,200 C = A/B Degree of Operating leverage 4.17

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