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$25,000Variable expenses 17,500Contribution margin 7,500Fixed expenses 4,200Net operating income$3,300 8. What is the break-even point in unit sales?9. What is the break-even point in dollar sales?10. How many units must be sold to achieve a target profit of $4,500?

Answered: Oslo Company prepared the following…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5PB: Wellington, Inc., reports the following contribution margin income statement for the month of May....

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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	$	25,000
Variable expenses		17,500
Contribution margin		7,500
Fixed expenses		4,200
Net operating income	$	3,300

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

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

10. How many units must be sold to achieve a target profit of $4,500?

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Step 1

Break-even analysis is a technique used widely by the production management. It helps to determine the units to be sold to recover the total cost. It also helps to set the price of the product. Break-even analysis includes contribution margin, break-even, profit volume ratio etc.

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