Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...

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?

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Expert Solution

Contribution margin per unit=(8000/1000)=$8 per unit

Hence Total Contribution margin for 900 units=($8*900)=$7200

Less:Fixed expenses=(6000)

Net operating income=$1200

NOTE:Total fixed costs and variable cost per unit do not change with change in units

ekkarill92 answered 1 year ago

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