Reference no: EM132465763

You are a consultant and a client approached you for advice. The client (Oasis) is a wholesaler that distributes a single product. Oasis's revenues and expenses for the last two months are given below:

                                            May                 June

Sales in units...............      1000                1,500

Sales revenue................      $420,000     $630,000

Cost of goods sold               168,00 0         252,000

Salaries and commissions        151,000       199,000

Depreciation expense            121,000         121,000

Net operating income (loss)    ($ 20,000)     $ 58,000

Oasis's management is targeting an operating income of $75,000 for the month of July. To give her the advice, you need to determine the followings:

Question a. Determine which of the expenses/costs are variable, fixed, &/or mixed. Separate the mixed costs/expenses into its variable and fixed components, if any.

Question b. Compute the company's total variable cost and then contribution margin for the month of June.

Question c. How many units Oasis needs to sell to achieve the target operating income of $75,000 in the month of July?