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Blue company has prepared the following contribution format income statement basedon a sales volume of 1,000 units (the relevant range of production is 500 to 1,500 units):
Sales	$ 20,000
Variable expenses	12,000
Contribution margin	8,000
Fixed expenses	6,000
Net operating income	$ 2,000
Questions:

1. What is the contribution margin per unit? Calculated as follows

2. What is the contribution margin ratio? Calculated as follows

3. What is the variable expense ratio? Calculated as follows

4. If sales increase to 1,001 units, what would be the increase in net operating income? Calculated as follows

5. If sales decline to 900 units, what would be the net operating income? Computed as follows

6. If the selling price increases by $2 per unit and thes ales volume decreases by 100 units, what would be the net operating income? Computed as follows

7. If the variable cost per unit increases by $1, spending on advertising incrases by $1,500, and unit sales incrase by 250 units, what would be the net operating income? Computed as follows

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

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

10. How many units must be sold to achieve a target profit of $5,000? Calculated as follows

11. What is the margin of safety in dollars? Calculated as follows

12. What is the degree of operating leverage? Calculated as follows

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