Question

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (32,000 units) $ 192,000 $ 6.00 Variable expenses 96,000 3.00 Contribution margin 96,000 $ 3.00 Fixed expenses 49,000 Net operating income $ 47,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 12%? 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 17%? 3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 5%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 6%?

Answer 1

Answer:

Answer is given below:

Explanation:

Answer-

1 Net operating income $63480

2 Net operating income $22968

3 Net operating income $73336

4 Net operating income $41400

Explanation-

Miller Company

Operating income

Particulars                                                                         Amount $

Sales                   (32000 units*1.13)*$6 per unit                        216960

Less:- Variable cost 36160 units*$3 per unit                             108480

Contribution                                                                                   108480

Less:- Fixed costs                                                                            45000

Net operating income                                                                   63480

Miller Company

Operating income

Particulars                                                                               Amount $

Sales (32000 units*1.18)*($6 per unit-$1.20 per unit)              181248

Less:- Variable cost 37760 units*$3 per unit                           113280

Contribution                                                                                67968

Less:- Fixed costs                                                                       45000

Net operating income                                                                 22968

Miller Company

Operating income

Particulars                                                                         Amount $

Sales (32000 units*94%)*($6 per unit+$1.20 per unit)              216576

Less:- Variable cost 28200 units*$3 per unit                      90240

Contribution                                                                               126336

Less:- Fixed costs (45000+8000)                                                53000

Net operating income                                                                 73336

Miller Company

Operating income

Particulars                                                                                 Amount $

Sales (32000 units*90%)*($6 per unit*1.10)                          190080

Less:- Variable cost 28800 units*($3 per unit*1.20)              103680

Contribution                                                                            86400

Less:- Fixed costs                                                                      45000

Net operating income                                                                 41400