Question

7. If the variable cost per unit increases by 5.60, spending on advertising increases by 51 100, and unit sales increase by 250 units, what would be the net operating income? (Do not found inte Not operating income References Book & Resources Required Information Worksheet Learning Objective 03-03 Use the contribution margin ratio (CM ratio) to compute changes in contribution margin and net operating income resulting from changes in sales volume The following f an s to the questions bevo Difficulty: 2 Medium Learning Objective: 03-04 Show the effects on not operating income of changes in variable costs, food costs, seling price and volume Oslo Company prepared the following contribution format income strement based on a sales volume of 1000 units the relevant range of production is 500 to 1500 units Leaming Objective 03-05 Determine the break even point Learning Objective: 03-01 Explain how changes in activity affect contribution margin and net operating income. 125.00 1000 Sales Variable expenses Contribution margin Check my work Fored expenses Net operating income

Answer 1

	At 1,000 units	At 1,250 units
Sales	$        25,700	$        32,125
Variable expense	$        13,900	$        18,125
Contribution margin	$        11,800	$        14,000
Fixed expenses	$           7,788	$           8,888
Net operating income	$           4,012	$           5,112

Here is the formula version

	At 1,000 units	At 1,250 units
Sales	25700	=25700/1000*1250
Variable expense	13900	=(13.9+0.6)*1250
Contribution margin	=C3-C4	=D3-D4
Fixed expenses	7788	=7788+1100
Net operating income	=C5-C6	=D5-D6