Question

Miller Company's contribution format income statement for the most recent month is shown below: Sales (40,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 280,000 160,000 120,000 41,000 $ 79,000 Per Unit $ 7.00 4.00 $3.00 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 18%? 2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 18%? 3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $9,000, and the number of units sold decreases by 6%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 12%? 1. Net operating income 2. Net operating income 3. Net operating income 4. Net operating income

Answer 1

Sales Units 40000 Sales 280000 Variable Expneses 160000 Contribution Margin 120000 Fixed Cost 41,000 Net Operating income 79,000 Net Operatting income = (( Selling Price - Variable cost)* Units) - Fixed Expneses Answers Revised Net operating income If sales are increased by 18% Revised Net operating income (3))*40000*1.18-41000 100600 Revised Net operating income If selling Price Decreased by $1.30 and Number of Units Increased by 18% Revised Net operating income (5.7-4)*41000*1.18-41000 39240 Selling price increased by 1.30, Fixed cost Increased by 9000 and units decreased by6% Revised Net operating income (8.3-4)*41000*0.94-50000 111680) Selling price increased by 20% Variable cost by 40 Cents,units decreased by 12% Revised Net operating income (8.40-4.40)*41000*0.88-41000 99800 4