Question

hey this is a milti-lart question. the info in the table is for all parts.

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

Answer 1

5 Net Operating Income $2,550 Sales units Sales Variable cost Contribution margin Fixed cost Net operating income 900 Total $22,500 $15,750 $6,750 $4,200 $2,550 per unit $25.00 $17.50 $7.500 Working notes: per unit Existing Sales Variable cost Total $25,000 $17,500 $25.00 $17.500 6 Net operating income $750 Sales units per unit Sales Variable cost Contribution margin Fixed cost Net operating income 900 Total $20,700 $15,750 $4,950 $4,200 $750 $23.00 $17.50 $5.50 7 Net operating income $1,995 Sales units per unit Sales Variable cost Contribution margin Fixed cost Net op g income 1,130 130 units increase Total $28,250 $25.00 same $20,905 $18.50 increase by $1 $7,345 $6.50 $5,350 $4,200+ $1,150 $1,995 Units 8 Break-even point in sales units Fixed Cost Contribution margin per unit $4,200 $7.50 560 Sales $ 9 Break-even point in sales $ Fixed Cost Contribution Margin ratio $4,200 30.00% $14,000 Existing Sales Variable cost Contribution margin CM ratio (CM/Sales)*100% Total $25,000 $17,500 $7,500 30.00% per unit $25.00 $17.500 $7.50 10 Units Units to sell to achieve target profit Fixed Cost + Target profit Contribution margin per unit $8,700 $7.500 1,160 $11,000 11 Margin of safety in dollars (Total sales - Beak even sales) Margin of safety percentage (Margin of Safety/Actual sales)*100 44.0% ($11,000/$25,000)*100 Actual sales Break even sales Margin of safety in dollars $25,000 $14,000 B $11,000 A-B 12 Operating leverage Contribution margin Net operating income $7,500 $3,300 2.27 13 Increase in net operating income 11.35% (5%*2.27) (Increase in sales * Operating leverage 14 Operating leverage Contribution margin Net operating income $20,800 $3,300 6.30 Sales Variable cost Contribution margin Fixed cost Net Income $25,000 $4,200 $20,800 $17,500 $3,300 15 Increase in net operating income 31.50% (5%*6.30) (Increase in sales * Operating leverage)