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 Net operating income 95,000 57,000 38,000 31,920 $6,080 Required: 1. What is the contribution margin per unit? (Round your answer to 2 decimal places.) ntributio n margin per unit 38.00

Explanation / Answer

8)

Ans

Break-even point in unit sales

Break even point =   Fixed cost

Contribution per unit

= $31,920

38000/1000

= $31920/38 = 840 Units

9)

Ans

Break even point in Dollar sales

Break even point in sales Dollars = Break even units X selling price

= 840 X 95 (95000 /1000 units)

= $79800

10)

Ans

Target contribution = Fixed cost + Target profit

= $31,920 + $22,800

= 54720

No. of units = Target contribution

contribution per unit

= 54720

38

= 1440 Units

11)

Ans

Margin of safety in dollars = Sales - Break even Sales (840 units)

= $95000 - 79800

= $15,200

Margin of safety Percentage = Margin of safety in $

sales

= $15200

95000

= 0.16 or 16%

12)

Ans

Degree of operating Leverage = Contribution Margin / Net operating income

= 38000/6080 = 6.25

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