The following information applies to the questions displayed below.] Oslo Compan
ID: 2524910 • Letter: T
Question
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):
What is the break-even point in dollar sales?
How many units must be sold to achieve a target profit of $13,200?
What is the margin of safety in dollars? What is the margin of safety percentage?
What is the degree of operating leverage? (Round your answer to 2 decimal places.
Sales $ 55,000 Variable expenses 33,000 Contribution margin 22,000 Fixed expenses 14,960 Net operating income $ 7,040What is the break-even point in dollar sales?
How many units must be sold to achieve a target profit of $13,200?
What is the margin of safety in dollars? What is the margin of safety percentage?
What is the degree of operating leverage? (Round your answer to 2 decimal places.
Explanation / Answer
Contribution margin ratio=Contribution margin/Sales
=(22000/55000)=0.4
Hence 1.breakeven =Sales/Contribution margin ratio
=(14960/0.4)=$37400
2.Target Contribution margin=Fixed cost+Target profits
=(14960+13200)=$28160
Contribution margin/unit=(22000/1000)=$22/unit
Hence units to bne sold=(28160/22)=1280 units
3.MOS=Total sales-Breakeven sales
=(55000-37400)=$17600
=(17600/55000)=32%
4.DOL=Contribution margin/Net operating income
(22000/7040)=3.13(Approx).
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