80.2K

Verified Solution

Link Copied!

[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	$	25,400
Variable expenses		13,800
Contribution margin		11,600
Fixed expenses		7,772
Net operating income	$	3,828

5.

value: 0.50 points

Required information

5.	If sales decline to 900 units, what would be the net operating income? (Do not round intermediate calculations.)

6.

value: 0.50 points

Required information

6.	If the selling price increases by $1.70 per unit and the sales volume decreases by 100 units, what would be the net operating income? (Do not round intermediate calculations.)

7.

value: 0.50 points

Required information

7.	If the variable cost per unit increases by $.70, spending on advertising increases by $1,200, and unit sales increase by 250 units, what would be the net operating income? (Do not round intermediate calculations.)

8.

value: 0.50 points

Required information

8.	What is the break-even point in unit sales? (Do not round intermediate calculations.)

9.

value: 0.50 points

Required information

9.	What is the break-even point in dollar sales? (Round intermediate calculations to 4 decimal places. Round your final answer to the nearest dollar amount.)

10.

value: 0.50 points

Required information

10.	How many units must be sold to achieve a target profit of $7,714? (Do not round intermediate calculations.)

11.

value: 0.50 points

Required information

11-a.

What is the margin of safety in dollars? (Do not round intermediate calculations.)

11-b.

What is the margin of safety percentage? (Round your final answers to the nearest whole percentage (i.e, .12 should be entered as 12).)

12.

value: 0.50 points

Required information

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

13.

value: 0.50 points

Required information

13.	Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).

14.

value: 0.50 points

Required information

15.

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 $7,772 and the total fixed expenses are $13,800. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).

Answer & Explanation Solved by verified expert

See Answer