Question

5-8

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	$	25,000
Variable expenses		17,500
Contribution margin		7,500
Fixed expenses		4,200
Net operating income	$	3,300

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

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

7.  If the variable cost per unit increases by $1, spending on advertising increases by $1,150, and unit sales increase by 130 units, what would be the net operating income?

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

Answer 1