Reference no: EM131259827
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 $ 23,0000
Variable Expenses 13,000
Contribution Margin 10,000
Fixed Expenses 8,500
Net Operating Income 1,500
A) If sales increase to 1,001 units, what would be the increase in net operating income?
B) What is the break-even point in unit sales?
C) What is the break-even point in dollar sales?
D) What is the margin of safety in dollars?
E) What is the margin of safety percentage?
F) What is the degree of operating leverage?
G) Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales?
H) Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,500 and the total fixed expenses are $13,000. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percent increase in net operating income of a 4% increase in sales?
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