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 | $ | 55,000 |
Variable expenses | 33,000 | |
Contribution margin | 22,000 | |
Fixed expenses | 14,960 | |
Net operating income | $ | 7,040 |
11. What is the margin of safety in dollars? What is the margin of safety percentage?
Sales = $55,000
Less: Variable cost = $33,000
Contribution Margin = $22,000
Less: Fixed Expenses = $14,960
Net Operating Income = $7,040
Contribution Margin ratio = Contribution margin / sales = $22,000 / $55,000 = 0.40
Break even point (sales in dollars) = Fixed cost / Contribution margin ratio = $14,960 / 0.40
Break even point (sales in dollars) = $37,400
Margin of safety = Actual sales - Break even sales = $55,000 - $37,400
Margin of safety = $17,600.
Margin of safety percentage = (Actual sales - Break even sales) / Actual sales
= $17,600 / $55,000 = 0.32
Margin of safety percentage = 32%
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
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 $ 55,000 Variable expenses 33,000 Contribution margin 22,000 Fixed expenses 14,960 Net operating income $ 7,040 5. If sales decline to 900 units, what would be the net operating income?
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 $ 55,000 Variable expenses 33,000 Contribution margin 22,000 Fixed expenses 14,960 Net operating income $ 7,040 7. If the variable cost per unit increases by $1, spending on advertising increases by $1,450, and unit sales increase by 190 units, what would be the net operating income?
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 $ 55,000 Variable expenses 33,000 Contribution margin 22,000 Fixed expenses 14,960 Net operating income $ 7,040 14. Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $14,960 and the total fixed expenses are $33,000....
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 $ 55,000 Variable expenses 33,000 Contribution margin 22,000 Fixed expenses 14,960 Net operating income $ 7,040 15. Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $14,960 and the total fixed expenses are $33,000....
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