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6 January, 01:52

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 $ 20,000 Variable expenses 12,000 Contribution margin 8,000 Fixed expenses 6,000 Net operating income $ 2,000 4. If sales increase to 1,001 units, what would be the increase in net operating income

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  1. 6 January, 01:58
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    The increase in net operating income will be $8

    Explanation:

    1000 units

    Selling price = $20,000 / 1,000 = $20

    Variable cost = $12,000 / 1,000 = $12

    1001 units

    Contribution margin Income statement

    Sales $20,020

    Less: Variable Expenses $12,012

    Contribution margin $8,008

    Less: Fixed Expenses $6,000

    Net operating Income $2,008

    Selling price = $20 x 1,001 = $20,020

    Variable cost = $12 x 1,001 = $12,012

    Increase in Income statement = $2,008 - $2,000 = $8
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