Question

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per unitSales (33,000 units) $330,000 $10.00 Variable expenses $231,000 $7.00Contribution margin 99,000 $3.00 Fixed expenses 50,000 Net operating income $49,000 Required:(Consider each case independently):1. What is the revised net operating income if unit sales increase by 13%?2. What is the revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold increases by 24%?3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 4%?4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Sales (33,000 units for $10)= $330,000

Variable expenses $231,000 ($7.00)

Contribution margin 99,000 ($3.00)

Fixed expenses 50,000

Net operating income $49,000

1) Increase in sales= 13%

Income= (33,000*1.13)*$3 - 50,000= $61,870

2) Price= $8.8

Units sale= 33,000*1.24= 40,920

Income= (8.8 - 7)*40,920 - 50,000= $23,656

3) Price= 11.2

Sales= 33,000*0.96= 31,680

Fixed costs= 57,000

Income= (11.2 - 7)*31,680 - 57,000= $76,056

4) Price= 11

Variable cost= 7.3

Sales= 33,000*0.88= 29,040

Income= (11-7.3)*29,040 - 50,000= $57,448