Question

please help with 5 -10

e meducation.com/flow/connect.html U SU Gmelere d excel Help Save Required information The Foundational 15 [LO5-1, LO5-3, LO5-4, LOS-5, LO5-6, LO5-7, LO5-8) (The following information applies to the questions displayed below.) Oslo Company prepared the following contribution format income statement based on a sales volume of 1000 units (the relevant range of production is 500 units to 1,500 units): 500 units $105,000 73.500 Sales Variable expenses Contribution margin Pixed expenses Net operating income J1,500 3.780 Foundational 5-5 5. If sales decline to 900 units, what would be the net operating income? Net operating income

6. if sales price increase by $2 per unit and the sales volume decreases bu 100 units what would be the net operating income?

7. if the variable cost per unit increases by $1, spending on advertising increases by $1950 and unit sales increases by 290 units, what would be the net operating income?

8. what is the break-even point in unit sales?

9. what is the break-even point in dollar sales?

10. how many units must be sold to achieve a target profit od $18,900

Answer 1

Selling price per unit = $105,000 / 1000 = $105
Variable cost per unit = $73,500 / 1000 = $73.5
Contribution margin per unit = $105 - $73.5 = $31.5

5). If sales decline to 900 units Sales (900 units * $105) Variable cost (900 units * $73.5) Contribution margin Fixed costs Net Operating Income 94,500.00 66,150.00 28,350.00 27,720.00 630.00 s 6). If Sales price increase by $2 per unit and sales volume decrease by 100 units Sales (900 units * $107) 96,300.00 Variable cost (900 units * $73.5) $ 66,150.00 Contribution margin 30,150.00 Fixed costs 27,720.00 Net Operating Income 2,430.00 $ 7). IF Variable cost increase by $1, advertising increase by $1950 Sales (1290 units * $105) $ 1,35,450.00 Variable cost (1290 units * $74.5) 96,105.00 Contribution margin 39,345.00 Fixed costs (27720 + 1950) 29,670.00 Net Operating Income 9,675.00

8). Breakeven point in unit sales = Fixed costs / Contribution margin per unit
= $27,720 / $31.5
= 880 units

9). Breakeven point in dollar sales = 880 units * $105 = $92,400

10). units must be sold to achieve a target profit of $18,900 :
= (Fixed costs + Target profit) / Contribution margin per unit
= ($27,720 + $18,900) / $31.5
= 1,480 units