Question

net opereting income

Required information 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 Net operating income $ 65,000 45,500 19,500 14,840 $ 5,460 4. If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.) Increase in net operating income

Answer 1

Solution 4:

Contribution margin per unit = $19500 / 1000 units = $19.50 per unit

Increase In sales units = 1001 - 1000 = 1 unit

Increase in net operating income = $19.50 * 1 unit = $19.50

Solution 5:

Net operating Income = Units* Contribution margin per unit - Fixed costs = 900*$19.50 - $14040 = $3,510

Solution 6:

New selling price = ($65000/1000) + $2 = $65 + $2 = $67 per unit

variable cost per unit = $45500/ 1000 = $45.50

new Contribution margin per unit = $67 - $45.50 = $21.50 per unit

New unit sales = 1000 - 100 = 900 units

net Operating income = Units* Contribution margin per unit - Fixed costs = 900*$21.50 - $14040 = $5,310