Oslo Company prepared the following contribution format incomestatement based on a sales volume of 1,000 units (the relevantrange of production is 500 units to 1,500 units):
Sales $ 100,000 Variableexpenses 65,000 Contribution margin 35,000 Fixedexpenses 30,100 Netoperating income $ 4,900
10a. How many units must be sold to achieve a target profit of$21,000?
10b. What is the margin of safety in dollars? What is the marginof safety percentage?
10c. What is the degree of operating leverage?
10d. Using the degree of operating leverage, what is theestimated percent increase in net operating income of a 5% increasein sales?
Oslo Company prepared the following contribution format incomestatement based on a sales volume of 1,000 units (the relevantrange of production is 500 units to 1,500 units):
| Sales | $ | 100,000 |
| Variableexpenses | 65,000 | |
| Contribution margin | 35,000 | |
| Fixedexpenses | 30,100 | |
| Netoperating income | $ | 4,900 |
10a. How many units must be sold to achieve a target profit of$21,000?
10b. What is the margin of safety in dollars? What is the marginof safety percentage?
10c. What is the degree of operating leverage?
10d. Using the degree of operating leverage, what is theestimated percent increase in net operating income of a 5% increasein sales?
Related questions
Oslo Company prepared the following contribution format incomestatement based on a sales volume of 1,000 units (the relevantrange of production is 500 units to 1,500 units):
| Sales | $ | 100,000 |
| Variableexpenses | 65,000 | |
| Contribution margin | 35,000 | |
| Fixedexpenses | 30,100 | |
| Netoperating income | $ | 4,900 |
13a. Using the degree of operating leverage, what is theestimated percent increase in net operating income of a 5% increasein sales? (Round yourintermediate calculations and final answer to 2 decimalplaces.)
13b. What is the margin of safety in dollars?What is the margin of safety percentage?
| Margin of safety indollars | ||
| Margin of safetypercentage |
Oslo Company prepared the following contribution format incomestatement based on a sales volume of 1,000 units (the relevantrange of production is 500 units to 1,500 units):
| Sales | $ | 100,000 |
| Variableexpenses | 65,000 | |
| Contribution margin | 35,000 | |
| Fixedexpenses | 30,100 | |
| Netoperating income | $ | 4,900 |
2a. What is the contribution margin ratio?
2b.What is the variable expense ratio?
2c. If sales increase to 1,001 units, what would be the increasein net operating income?
2d. If sales decline to 900 units, what would be the netoperating income?
Oslo Company prepared the following contribution format incomestatement based on a sales volume of 1,000 units (the relevantrange of production is 500 units to 1,500 units):
| Sales | $ | 100,000 |
| Variableexpenses | 65,000 | |
| Contribution margin | 35,000 | |
| Fixedexpenses | 30,100 | |
| Netoperating income | $ | 4,900 |
14a. Assume that the amounts of the companyâs total variableexpenses and total fixed expenses were reversed. In other words,assume that the total variable expenses are $30,100 and the totalfixed expenses are $65,000. Under this scenario and assuming thattotal sales remain the same, what is the degree of operatingleverage? (Round your answerto 2 decimal places.)
14b. Assume that the amounts of the companyâs total variableexpenses and total fixed expenses were reversed. In other words,assume that the total variable expenses are $30,100 and the totalfixed expenses are $65,000. Given this scenario and assuming thattotal sales remain the same. Using the degree of calculatedoperating leverage, what is the estimated percent increase in netoperating income of a 5% increase in sales? (Round your intermediate calculations andfinal answer to 2 decimal places.)
14c. What is the contribution margin per unit? (Round your answer to 2 decimalplaces.)
