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 Foundational 5-15 (Static) $ 20,000 12,000 8,000 6,000 $ 2,000 15. Assume the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume the total variable expenses are $6,000 and the total fixed expenses are $12,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales?
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 Foundational 5-15 (Static) $ 20,000 12,000 8,000 6,000 $ 2,000 15. Assume the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume the total variable expenses are $6,000 and the total fixed expenses are $12,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Domestic
![The Foundational 15 (Static) [LO5-1, LO5-2, LO5-3, LO5-4, LO5-5, LO5-6, LO5-7]
[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
Foundational 5-15 (Static)
$ 20,000
12,000
Increase in net operating income
8,000
6,000
$ 2,000
15. Assume the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume the
total variable expenses are $6,000 and the total fixed expenses are $12,000. Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase in unit sales?
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa335ea81-0cf3-4466-bfa1-3011d19f2777%2F0b5e605b-b17e-460f-879a-9f42a61721ac%2F515i6ja_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Foundational 15 (Static) [LO5-1, LO5-2, LO5-3, LO5-4, LO5-5, LO5-6, LO5-7]
[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
Foundational 5-15 (Static)
$ 20,000
12,000
Increase in net operating income
8,000
6,000
$ 2,000
15. Assume the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume the
total variable expenses are $6,000 and the total fixed expenses are $12,000. Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase in unit sales?
%
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