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	$	20,000
Variable expenses		12,000
Contribution margin		8,000
Fixed expenses		6,000
Net operating income	$	2,000

1. If sales decline to 900 units, what would be the net operating income?

Net operating income= ?

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

Net operating income=?

3. If the variable cost per unit increases by $1, spending on advertising increases by $1,500, and unit sales increase by 250 units, what would be the net operating income?

Net operating income=?

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

Break even points= ? Units

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

Break even point= ?

6. How many units must be sold to achieve a target profit of $5,000?

Number of units=?

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

Margin of safety in dollars	?
Margin of safety in percentage	?

Answer 1