If sales decline to 900 units what would be the net operatin

If sales decline to 900 units, what would be the net operating income? (Do not round intermediate calculations.)

If the selling price increases by $2.10 per unit and the sales volume decreases by 100 units, what would be the net operating income? (Do not round intermediate calculations.)

If the variable cost per unit increases by $1.10, spending on advertising increases by $1,600, and unit sales increase by 250 units, what would be the net operating income? (Do not round intermediate calculations.)

What is the break-even point in unit sales? (Do not round intermediate calculations.)

[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 $20,300 12,100 Contribution margin Fixed expenses 8,200 6,232 Net operating income $ 1,968

Solution

Sale Value for 1000 units $20300

Selling price per unit 20300/1000 = $20.30

Variable cost for 1000 units $12100

Variable cost per unit 12100/1000 = $12.10

1) If sales decline to 900 units

Sale value for 900 units 900*20.30 = $18270

Variable Expenses 900*12.10 = $10890

Contribution margin $ 7380

Fixed Expenses $ 6232

Net Operating Income $ 1148

2.If selling price increased by $2.10 and Sales Volume decreases by 100 units

Revised selling price per unit $20.3+$2.10 = $22.40

Revised Sales Volume in units 1000-100 = 900

Revised Sale Value $22.40*900 = $20160

Variable expenses 900* 12.10= $ 10890

Contribution margin $9270

Fixed expenses $6232  

Net Operating Income $3038

3. f the variable cost per unit increases by $1.10, spending on advertising increases by $1,600, and unit sales increase by 250 units

Revised Sale quantity 1000+250=1250

Revised variable cost per unit $12.10+$1.10=$13.20

Revised sale value 1250 *20.30= $25375

Revised Variable Expenses 1250*13.20= $16500

Contribution Margin $8875

Revised Fixed expenses $6232+$1600(Advt Exps) $7832

Net Operating income $ 1043

4. Break even point in unit sales

Break even point in unit sales = Fixed expenses/ Contribution per unit

Contribution per unit = Selling price per unit - Variable cost per unit

$20.30 - $12.10 = $8.20

Fixed Expenses $ 6232

Break Even point in unit sales = $6232/ $8.20 = 760 units

To cross check

Sale Value of 760 units 760* $20.30 = $15428

Variable Expenses 760* $ 12.10 = $9196

Contribution Margin $6232

Fixed Expenses $ 6232   

Net Operating income 0

Break even point is that point at which there are no profit or loss and the contribution margin covers the fixed expenses