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 | $ | 40,000 |
| Variable expenses | 26,000 | |
| Contribution margin | 14,000 | |
| Fixed expenses | 8,680 | |
| Net operating income | $ | 5,320 |
9. What is the break-even point in dollar sales?
10. How many units must be sold to achieve a target profit of $8,400?
11. What is the margin of safety in dollars? What is the margin of safety percentage?
margin of safety in dollars
margin of safety percentage
12. What is the degree of operating leverage? (Round your answer to 2 decimal places.)
Homework Answers
|
Break even sales = Fixed cost/Contribution margin ratio Contribution margin ratio = 14000/40000 = 35% = 8680/35% = 24,800 |
|
Units to be sold = (Fixed costs+target profit) /Contribution margin per unit = (8680+8400)/14 = 1220 |
|
Margin of Safety = Sales - Breakeven sales = 40,000 - 24,800 = 15,200 Margin of Safety percentage = 15,200/40,000 = 38% |
|
Degree of operating leverage = Contribution margin/net operating income = 14,000/5320 = 2.63 |
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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...
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 Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? (Round your intermediate calculations and final answer to 2 decimal places.) 2....
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OSLO COMPANY PREPARED THE FOLLOWING CONTRIBUTION FORMAT INCOME STATEMENT BASED ON A SALES VOLUME OF 1,000...
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Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
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Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
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