Question

Required information [The following information applies to the questions displayed below.] 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 $ 50,000 Variable expenses 27,500 Contribution margin 22,500 Fixed expenses 14,850 Net operating income $ 7,650 7. If the variable cost per unit increases by $1, spending on advertising increases by $1,400, and unit sales increase by 180 units, what would be the net operating income?

Answer 1

	Before	After
Number of units	1000	1180
Selling price per unit	$             50	$          50
Variable expense per unit	$             28	$          29
Fixed expenses	$     14,850	$ 16,250
	Before	After
Sales	$     50,000	$ 59,000
Variable expenses	$     27,500	$ 33,630
Contribution margin	$     22,500	$ 25,370
Fixed expenses	$     14,850	$ 16,250
Net Operating Income	$       7,650	$    9,120
Therefore, Net operating Income is $9,120