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): 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)

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%

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 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
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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
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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 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 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 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 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 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
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in dollars? (Do not round intermediate calculations.) 2. What is
the margin of safety percentage? (Round your final answers to the
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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 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
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Oslo Company prepared the following contribution format income
statement based on a sales volume of 1,000 units (the relevant
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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
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