Question

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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	$	40,000
Variable expenses		26,000
Contribution margin		14,000
Fixed expenses		8,680
Net operating income	$	5,320

1. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income?

2. If the variable cost per unit increases by $1, spending on advertising increases by $1,300, and unit sales increase by 160 units, what would be the net operating income?

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

Answer 1