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): Required (Answer each question independently and always refer to the original data unless instructed otherwise.)

Sales $ 22,100

Variable expenses 12,700

Contribution margin 9,400

Fixed expenses 7,708

Net operating income $ 1,692

7.If the variable cost per unit increases by $.80, spending on advertising increases by $1,300, and unit sales increase by 250 units, what would be the net operating income? 8.What is the break even point in unit sales?

10.How many units must be sold to achieve a target profit of $5,546?

11.What is the margin of safety in dollars? What is the margin of safety percentage?

12.What us tge degree of operating leverage?

13.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales?

14.Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $7,708 and the total fixed expenses are $12,700. 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 company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $7,708 and the total fixed expenses are $12,700. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34)

Homework Answers

Answer #1

Answer of Part 8:

Contribution Margin Ratio = Contribution Margin / Sales*100
Contribution Margin Ratio = $10,750 / $27,625 *100
Contribution Margin Ratio = 38.91%

Break Even Point in Unit Sales = Fixed Expenses / Contribution Margin Ratio
Break Even Point in Unit Sales = $9,008 / 0.3891
Break Even Point in Unit Sales = 23,151

Answer of Part 10:

Contribution margin per Unit = Contribution Margin / Units
Contribution Margin per Unit = $10,750 /1,250
Contribution Margin per unit = $8.6

Required Sales Volume = (Fixed Costs + Desired Profit) / Contribution Margin per unit
Required Sales Volume = ($9,008 + $5,546) / $8.6
Required Sales Volume = $14,554 / $8.6
Requires Sales Volume = 1,692 units

Answer of Part 11:

Margin of Safety =Sales – Break Even Point
Margin of Safety = $27,625 - $23,151
Margin of Safety = $4,474

Margin of Safety percentage = Margin of Safety / Sales *100
Margin of Safety percentage = $4,474 / $27,625 *100
Margin of Safety percentage = 16.20%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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): Required (Answer each question independently and always refer to the original data unless instructed otherwise.) Sales $ 22,100 Variable expenses 12,700 Contribution margin 9,400 Fixed expenses 7,708 Net operating income $ 1,692 12.What us tge degree of operating leverage? 13.Using the degree of operating leverage, what is the estimated percent increase in...
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 $ 15,000 Variable expenses 9,000 Contribution margin 6,000 Fixed expenses 3,120 Net operating income $ 2,880 11. What is the margin of safety in dollars? What is the margin of safety percentage? margin of safety in dollars____ margin of safety percentage____ 12. What is the degree of operating leverage? (Round your...
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 $ 105,000 Variable expenses 73,500 Contribution margin 31,500 Fixed expenses 27,720 Net operating income $ 3,780 Foundational 5-11 A. What is the margin of safety in dollars? What is the margin of safety percentage? B. What is the degree of operating leverage? (Round your answer to 2 decimal places.) C. Using...
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 $ 65,000 Variable expenses 45,500 Contribution margin 19,500 Fixed expenses 14,040 Net operating income $ 5,460 1. What is the margin of safety in dollars? What is the margin of safety percentage? 2. What is the degree of operating leverage? (Round your answer to 2 decimal places.) 3. Using the degree...
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 $ 22,700       Variable expenses 12,900       Contribution margin 9,800       Fixed expenses 8,232       Net operating income $ 1,568     13. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? Do not round intermediate calculations. Round your...
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 $ 30,000 Variable expenses 16,500 Contribution margin 13,500 Fixed expenses 7,830 Net operating income $ 5,670 Required: 13. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? (Round your intermediate calculations and final answer to 2 decimal places.)...
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 $ 20,300       Variable expenses 12,100       Contribution margin 8,200       Fixed expenses 6,232       Net operating income $ 1,968     1)     If sales decline to 900 units, what would be the net operating income? (Do not round intermediate calculations.)    2)     If the selling price increases by $2.10 per unit...
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 $ 24,200 Variable expenses 13,400 Contribution margin 10,800 Fixed expenses 7,668 Net operating income $ 3,132 1. What is the margin of safety in dollars? (Do not round intermediate calculations.) 2. What is the margin of safety percentage? (Round your final answers to the nearest whole percentage (i.e, .12 should be...
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 $ 105,000 Variable expenses 73,500 Contribution margin 31,500 Fixed expenses 27,720 Net operating income $ 3,780 15. Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $27,720 and the total fixed expenses are $73,500....
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   $   21,800 Variable expenses      12,600 Contribution margin      9,200 Fixed expenses      7,452 Net operating income   $   1,748 1. What is the contribution margin per unit? (Round your answer to 2 decimal places.) 2. What is the contribution margin ratio? (Enter your answer as a percentage...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT