Question

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (38,000 units) $ 380,000 $ 10.00 Variable expenses 266,000 7.00 Contribution margin 114,000 $ 3.00 Fixed expenses 42,000 Net operating income $ 72,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 14%? 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 25%? 3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $8,000, 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 10%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 7%?

Answer 1

Answer:

1) Revised net operating income if unit sales increase by 14% is $87960.

2) Revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 25% are $29250.

3) The revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $8,000, and the number of units sold decreased by 5% are $112450.

4) The revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40 cents per unit, and the number of units sold decreased by 7% is $85224.

Explanation: