Question

Assignment 1 (Ch1,2) 50 pts i Required information The following information applies to the questions displayed below.] Part 2 of 15 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): points Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 65,000 45,50e 19,500 14,040 $ 5,460 Skipped 2. What is the contribution margin ratio? Contribution margin ratio

Answer 1

Solution 2:

Contribution margin ratio = Contribution margin / Sales = $19,500 / $65,000 = 30%

Solution 3:

Variable expenses ratio = Variable expenses / sales = $45,500 / $65,000 = 70%

Solution 4:

Contribution margin per unit = $65*30% = $19.50 per unit

If sales increases to 1001 units, then increase in net operating income = Increase in contribution margin = $19.50

Solution 5:

If sales decline to 900 units then net operating income = Contribution margin - Fixed costs

= (900*$19.50) - $14,040 = $3.510

Solution 6:

New CM per unit = $19.50 + $2 = $21.50 per unit

Net operating income =

Contribution margin - Fixed costs

= (900*$21.50) - $14,040 = $5.310