Question

Required information The Foundational 15 (LO6-1, LO6-3, L06-4, L06-5, L06-6, LO6-7, LO6-8] [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. Tiet operating income $ 90,000 49,500 40.500 33.210 $ 7,200 Foundational 6-2 2. What is the contribution margin ratio? Contribution marginatio

Answer 1

Answer2.

Contribution margin ratio = Contribution margin / Sales
Contribution margin ratio = $40,500 / $90,000
Contribution margin ratio = 45%

Answer 3.

Variable expense ratio = Variable expenses / Sales
Variable expense ratio = $49,500 / $90,000
Variable expense ratio = 55%

Answer 4.

If sales volume is 1,000 units:

Contribution margin per unit = Contribution margin / Units sold
Contribution margin per unit = $40,500 / 1,000
Contribution margin per unit = $40.50

If sales volume increases to 1,001 units:

Increase in units sold = 1,001 - 1,000
Increase in units sold = 1

Increase in net operating income = Increase in units sold * Contribution margin per unit
Increase in net operating income = 1 * $40.50
Increase in net operating income = $40.50

Answer 5.

Units sold = 900

Net operating income = Contribution margin per unit * Units sold - Fixed expenses
Net operating income = $40.50 * 900 - $33,210
Net operating income = $3,240