Question

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (42,000 units) $ 336,000 $ 8.00 Variable expenses 210,000 5.00 Contribution margin 126,000 $ 3.00 Fixed expenses 42,000 Net operating income $ 84,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 15%? 2. What is the revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 20%? 3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 7%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 9%?

6.7.0

Answer 1

if selling price decreases by 41.5 unir - no of units sold increases by 2020 in & Sales = 42000 x 1:20% *(8-1.5 327600 (-) variable expense a 42000 x 102x5 25 zoot - Contribution Margin 75600 - fixed expense & 1 42,000 Net operating Income (Ang) ($33,600 I Selling price increased by $1.5 unit, & fixed expense incsceses G $10,000 no dunits sold decreases by 7% I sales a 42000 x 11-720 (8+105/371070 variable expeost = (42000 x 0.93x5 195 300 - Contribution Margin 175770 fixed expenses ($42000 + 10,000) 152,000 Net operating income Lans) 1123770 I

1) Sales pe unit = 8 / unit Total sales 3,36,000 (42,000 units) sales increase by 15% - if Sales = 336000 x 1.15% 386400 386 yoo variable cost = 587 42000 x 1.152 241500 - - Contribution mongin W fixed cost (expenses) (Ans) Net operating in come 1 144900 I 42000 $102900

④ Selling price increase by 20% per unit Variable expenses increase by 3000/unit no of units cold decreases by 9% Sales - 42000 *(1-9%)x(8x102%) 366912 (-) Verlable expense = 42000 x 0.91 x (5x103) 248430 Contribution Margin 118482 (- fixed Expenses 42000 Net operating Income (Ans) $76,482