Question

New loo search Required information [The following information applies to the questions displayed below) Shown here are condensed income statements for two different companies (assume no income taxes) Miller Company Sales $1,350,000 Variable expenses (0) 1,880,000 Income before interest 270.000 Interest expense (fixed) 72,099 Net Income $ 193,000 $1,350,000 Weaver Company Sales Variable expenses (x) Income before interest Interest expense (fixed) Net income 4. What happens to each company's net income sales decrease by 10% (Round your answers to nearest whole percent.) Company Miller Co Weaver Co Net income Decreases by Decreases by e to search < Prev 4 5 6 cm

Answer 1

Sales = $1,350,000 - ($1,350,000*10%)

= $1,215,000

Miller Company

Sales	$1,215,000
Variable expenses	$972,000 ($1,215,000*80%)
Income before interest	$243,000
Interest expense	$72,000
Net income	$171,000

Weaver Company

Sales	$1,215,000
Variable expenses	$729,000 ($1,215,000*60%)
Income before interest	$486,000
Interest expense	$342,000
Net income	$144,000

Company	Net income
Miller Co.	Decrease by 14% [($198,000-$171,000)/$198,000]
Weaver Co.	Decrease by 27% [($198,000-$144,000)/$198,000]