Question

Required information The Foundational 15 [LO6-1, LO6-3, LO6.4, LO6-5, LO6-6, 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 Net operating income $ 25,000 17,500 7,500 1.200 $ 3,300 Foundational 6-6 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? Net operating income

Answer 1

Solution 6) Computation of Net operating Income Sales (900 units x $ 27) Variable cost ( 900 units X $ 17.50) Contribution Margin Fixed Expenses Net Operating Income $ $ $ $ $ 24,300 15,750 8,550 4,200 4,350 Solution 7) Computation of Net operating Income Sales (1130 units X $ 25) Variable cost ( 1130 units X $ 18.50) Contribution Margin Fixed Expenses ($4200 + $ 1150) Net Operating Income $ $ $ 's $ 28,250 20,905 7,345 5,350 1,995 Solution 8) Contribution per uni ($ 25 - $17) Fixed Expenses (a) $ $ 8 4,200 (b) Break even point (b/a) 525 units Solution 9) Contribution per uni ($ 25 - $17) Break Even units $ (a) (b) 8 525 Break even point (sales) (axb) $ 4,200 units Solution 10) Target Profit Fixed costs Target Contribution Contribution per unit (a) (b) $ $ $ $ 4,500 4,200 8,700 8 Number of units (a/b) 1088 units

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