Required information The following information applies to the questions displaye

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 Variable expenses contribution margin Fixed expenses $80,000 52,000 28,000 21,840 $ 6,160 Net operating income 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? Net operating income

Explanation / Answer

6. If selling price increases by $2 per unit and sales decreases by 100 units

Sales unit changes to 900

Sales price changes to 82

Total sales = 900*82= $73,800

Variable cost = 52000*900/1000=$46,800

7.

$21,840

Sales unit changes to 1240

Therefore 80000*1240/1000= $99,200

Variable cost =52000*1240/1000= $64,800

Cost per unit is $64,800/1240=52

Variable cost increases by 1

Therefore (52+1)*1240 = $65,720

8.

Break even point is a point where no profit and no loss.

Break even point = fixed cost/(sales price-variable cost per unit)

= $21,840/(80-52)

= 780 units

9. Break even in dollar sales

Break even points (in units)*sales price/unit

780*80= $62,400

Thank u

Sales $73,800 Variable cost $46,800 Contribution margin $27,000 Fixed cost $21,840 Net operating income $5,160

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