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	$	50,000
Variable expenses		27,500
Contribution margin		22,500
Fixed expenses		14,850
Net operating income	$	7,650

Required:

7. If the variable cost per unit increases by $1, spending on advertising increases by $1,400, and unit sales increase by 180 units, what would be the net operating income?

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

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

10. How many units must be sold to achieve a target profit of $13,500?

Answer 1