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 $ 80,000Variable expenses 52,000Contribution margin 28,000Fixed expenses 21,840Net operating income $6,1601. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income?2. If the variable cost per unit increases by $1, spending on advertising increases by $1,700, and unit sales increase by 240 units, what would be the net operating income?3. What is the break-even point in unit sales?4. What is the break-even point in dollar sales?5. How many units must be sold to achieve a target profit of $16,800?

1. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income?

net operating income = $73,800 - $46,800 - $21,840 = $5,160

2. If the variable cost per unit increases by $1, spending on advertising increases by $1,700, and unit sales increase by 240 units, what would be the net operating income?

net operating income = $99,200 - $65,720 - $23,540 = $9,940

3. What is the break-even point in unit sales?

780 units

4. What is the break-even point in dollar sales?

$62,400

5. How many units must be sold to achieve a target profit of $16,800?

1,380 units

Explanation:

contribution margin per unit = $28,000 / 1,000 = $28

fixed expenses = $21,840

break even point = $21,840 / $28 = 780 units

($21,840 + $16,800) / $28 = 1,380 units

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