Question

Oslo Co prepared the following Contribution Format income statement based on sales volume of 1,000 units. (the relevant rage of production is 500 to 1500 units):

Sales 80,000
Var C 52,000
CM 28,000
Fixed 21,840
NOI 6,160

What is the Variable expense ratio?

Answer 1

The Variable Expense Ratio for Oslo Co is 65%, calculated by dividing total variable costs of $52,000 by total sales of $80,000 and multiplying by 100.

Step-by-step explanation:

The question is asking to calculate the Variable Expense Ratio, which is a measure used to determine what percentage of a company's sales is made up of variable costs. To find the Variable Expense Ratio, you divide the total variable costs by the total sales and then multiply by 100 to get a percentage. In the provided example, the Variable Expense Ratio would be calculated as follows:

Total Variable Costs = $52,000
Total Sales = $80,000
Variable Expense Ratio = (Total Variable Costs / Total Sales) × 100
Variable Expense Ratio = ($52,000 / $80,000) × 100 = 65%

Therefore, the Variable Expense Ratio for Oslo Co is 65%.