Question

Check my work 7. Part 7 of 15 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): 10 points Skipped Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 15,000 9,000 6,000 3,120 $ 2,880 Print 7. If the variable cost per unit increases by $1, spending on advertising increases by $1,050, and unit sales increase by 110 units, what would be the net operating income? Not operating income Next > 15 of 15 !!! < Prev 7 8 9 ME Gram tv ETA 20 MacBook Air

Answer 1

Old Data

#Sales

• Sold units. = 1000units
• Sales value. = $15000
• Sales per unit= $15000÷1000= $15 per unit

# Variable

• Variable expenses= $9000
• Variable expenses per unit= $ 9000÷1000= $9 per unit

#Fixed

• Fixed expenses = $3120

New Data After changes

#Sales increased by 110Units

• Sales Units = 1000+110 = 1110units
• Sales = 1110units × $15 = $16,650

#Variable

• Variable cost per unit = $9+$1 = $10
• Variable Cost. = 1110units × $10 = $11,100

#Fixed

• Fixed cost = $3120 + $1050 = $4170

Particulars	Amount
Sales	$16,650
Less Variable cost	($11,100)
Contribution margin	$5,550
Less Fixed cost	($4170)
Net Operating income	$1380

Note : Advertisement can be treated either as Variable Cost or Fixed cost, according to their factors involved. Here no additional information available so, I'm considering Advertisement was fixed.

#Even we consider Advertisement as variable the answer will be same but the contribution margin will change