PLEASE EXPLAIN CLEARLY!!! ALL THE QUESTIONS 1-11 Oslo Company prepared the follo

Question

PLEASE EXPLAIN CLEARLY!!! ALL THE QUESTIONS 1-11

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 $ 45,000 Variable expenses 31,500 Contribution margin 13,500 Fixed expenses 8,640 Net operating income $ 4,860

1.If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.)

2.If sales decline to 900 units, what would be the net operating income?

3. If the variable cost per unit increases by $1, spending on advertising increases by $1,350, and unit sales increase by 170 units, what would be the net operating income?

4. What is the break-even point in unit sales?

5.What is the break-even point in dollar sales?

6.How many units must be sold to achieve a target profit of $8,100?

7.What is the margin of safety in dollars? What is the margin of safety percentage?

8.What is the degree of operating leverage? (Round your answer to 2 decimal places.)

9 . Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?

10. 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 expenses are $8,640 and the total fixed expenses are $31,500. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?

11.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 expenses are $8,640 and the total fixed expenses are $31,500. Given this scenario and assuming that total sales remain the same. Using the degree of calculated 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.)

Explanation / Answer

Answer to 1.

Contribution for 1000 Units = $13,500

Contribution Per Unit = $13,500/1000 = $13.50 per unit.

Now,

Contribution for 1001 unit= 1001 x $13.50 = $13,513.50

Less: Fixed Cost (it wont change with increase in units)= $8,640.

Net Operating Profit = $3,513.50 - $8,640 = $4,863.50

Therefore, Increase in operating income is $4,860 - $4,863.50 = $3.50

2.

3.

4.

Break-even point in unit sales = Total Fixed cost / (Selling Price - Variable Cost)

Selling Price Per unit = Sales/ no. of units = $45,000/1000 = $45

Variable Cost Per unit = $31,500/1000 = $ 31.50

BEP in Units = 8,640/(45-31.50) = 640 units

5. BEP in units = 640 units * 31.50 = $20,160

Description Amount Sales 40500 Variable Expenses 28350 Contribution Margin 12150 Fixed Expenses 8640 Net Operating Income 3510 Description Amount Sales =($45,000/1000)*900 Variable Expenses =($31,500/1000)*900 Contribution Margin =($13,500/1000)*900 Fixed Expenses 8640 Net Operating Income =Contribution Margin - Fixed Expenses

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.