Question

! 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 $ 35,000 21,000 14,000 8,400 $ 5,600 5. If sales decline to 900 units, what would be the net operating income? Net operating income

Answer 1

Requirement 1(Question 5):-

If sales decline to 900 units:-

Sales price for 1000 units = $35,000

Sales price for 900 units = (900 * $35,000)/1000

Sales price for 900 units = $31,500

Variable costs for 900 units = (900 * $21,000)/1000

Variable costs for 900 units = $18,900

Sales decline to 900 units :-

Particulars	Amount
Sales price	31,500
Less:- Variable costs	(18,900)
Contribution Margin	12,600
Less:- Fixed costs	(8,400)
Net Income	4,200

Requirement 2(Question 6):-

Particulars	Amount
Sales price($37*900)	33,300
Less:- Variable costs($21 * 900 units)	(18,900)
Contribution Margin	14,400
Less:- Fixed costs	(8,400)
Net Income	6,000

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