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ACC 212 - MANAGERIAL ACCOUNTING SECTION 1 Fox Companys most recent income statement is shown below: Sales (100,000 units) Less: Variable expenses Contribution margin TOTAL PER UNIT $800,000 600,000 200,000 Less Fixed Expenses Net Income 160,000 40,000 REQUIRED: Calculate the impact on net income of each of the following conditions (consider each case independently) using the incremental contribution margin approach. (1) () The slling price: by 100peruni, and e sales volume kxras by (3) The selling price decreases by $1.00 per unit, fixed expenses increase by $5,000, (4) Variable expenses decrease by 25 cents per unit, the selling price decrease by 5%, The sales volume decreases 20%. 15%. and the sales volume increases by 10%. and the sales volume increases by 6%.

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I. Sales volume decreases by 20% Sale 100,000Sale 80,000Incremental Units @ $8Units $ 8 Revenue and Particulars Cost per unit $ 800,000$ 640,000$160,000 $600,000$ 480,000$120,000 $200,000$ 160,000$-40,000 $160,000$ 160,000 $ $40,000 $ per unit Sales Less : Variable Expenses @ $ 6 per unit Contribution Margin Less: Fixed Expenses Net Income/(Loss) $-40,000 2. Selling Price increases by $ 1 per unit and sales volume decreases by 15% Sale 100,000Sale 85,000Incremental Units @ $8Units $9 Revenue and per unit $800,000$ 765,000$35,000 $600,000$ 510,000$-90,000 $200,000$ 255,000$55,000 Particulars per unit Cost Sales Less : Variable Expenses @ $ 6 per unit Contribution Margin Less: Fixed Expenses Net Income/(Loss) $160,000$ 160,000 $ $40,000 $ 95,000$ 55,0003. Selling Price decreases by $ 1 per unit, fixed expenses increases by $ 5,000 and sales volume increases by 10%- Sale 100,000Sale 110,000Incremental Units @ $8Units@ $7Revenue and Particulars Cost per unit $800,000$ 770,000$30,000 $600,000$ 660,000$60,000 $200,000$ 110,000$-90,000 $160,000$ 165,000 $ $40,000$-55,000$-95,000 per unit Sales Less : Variable Expenses @ $ 6 per unit Contribution Margin Less: Fixed Expenses Net Income/(Loss) 5,000 4. Variable expenses decrease by 25 cents per unit, selling price decrease by 5%, and sales volume increases by 6%- Sale 100,000Sale 106,000Incremental Particulars Units @$8 Units@$7.60 Revenue and per unit per unit Cost $800,000$ 805,600 $ Less : Variable Expenses @ $6/5.75 per unit$ 600,000 609,500 $ $200,000$ 196,100 $ $ 160,000$ 160,000 $ $40,000$ 36,100 $ Sales 5,600 9,500 -3,900 Contribution Margin Less: Fixed Expenses Net Income/(Loss) -3,900

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