Question
In: Accounting
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units
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. What is the contribution margin ratio?
2. What is the variable expense ratio?
3. If sales decline to 900 units, what would be the net operating income?
Solutions
Expert Solution
1.contribution margin ratio=contribution margin /Sales
=(14000/40000)=35%
2.Variable expense ratio=(Variable expenses/Sales)
(26000/40000)=65%
3.Sales price per unit=(400000/1000)=$40 per unit
Hence new sales=(40*900)=$36000
New contribution margin =(36000*0.35)=$12600
LEss:Fixed costs=($8680)
Net operating income=$3920.
ekkarill92 answered 2 years agoRelated Solutions
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units
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
$
90,000
Variable expenses
49,500
Contribution margin
40,500
Fixed expenses
33,210
Net operating income
$
7,290
14. Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable...
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
$
105,000
Variable expenses
73,500
Contribution margin
31,500
Fixed expenses
27,720
Net operating income
$
3,780
Foundational 5-5
A. If sales decline to 900 units, what would be the net
operating income?
B. 6. If the selling price increases by $2 per unit and the
sales volume decreases by 100 units,...
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
$
100,000
Variable expenses
65,000
Contribution margin
35,000
Fixed expenses
30,100
Net operating income
$
4,900
10. How many units must be sold to achieve a target profit of
$21,000?
11. What is the margin of safety in dollars? What is the margin
of safety percentage?
12. What is the degree...
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
$
60,000
Variable expenses
39,000
Contribution margin
21,000
Fixed expenses
14,700
Net operating income
$
6,300
1. What is the variable expense ratio?
2. If sales increase to 1,001 units, what would be the increase
in net operating income? (Round your answer to 2 decimal
places.)
3. If sales decline to...
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
Required:
1. What is the contribution margin per unit?
2.. What is the contribution margin ratio?
3.What is the variable expense ratio?
4. If sales increase to 1,001 units, what would be the increase
in...
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?
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
$
100,000
Variable expenses
65,000
Contribution margin
35,000
Fixed expenses
30,100
Net operating income
$
4,900
3. What is the variable expense ratio?
4. If sales increase to 1,001 units, what would be the increase
in net operating income?
5. If sales decline to 900 units, what would be the net...
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
$
95,000
Variable expenses
57,000
Contribution margin
38,000
Fixed expenses
31,920
Net operating income
$
6,080
1. What is the contribution margin per unit?
2. What is the contribution margin ratio?
3. What is the variable expense ratio?
4. If sales increase to 1,001 units, what would be the increase
in...
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
$
23,900
Variable expenses
13,300
Contribution margin
10,600
Fixed expenses
7,632
Net operating income
$
2,968
Required:
What is the degree of operating leverage
Oslo Company prepared the following contribution format income
statement based on a sales volume of 1,000 units (the relevant
range...
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?
Net operating income= ?
2. If the selling price increases by $2 per unit and the sales
volume decreases by 100...
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