Question

LIELA WIK Miller Company's contribution format income statement for the most recent month is shown below: 1.5 points Sales (34,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 204,000 102,000 102,000 43,000 $ 59,000 Per Unit $ 6.00 3.00 $ 3.00 eBook Required: (Consider each case independently): Hint Print 1. What is the revised net operating income if unit sales increase by 19%? 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 $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 20 cents per unit, and the number of units sold decreases by 14%? References $ $ 78,380 16,670 1. Net operating income 2. Net operating income 3. Net operating income 4. Net operating income

Answer 1

Solution

a) Sales Increase by 19%

Sales ( 7.14 * 34000) =    2,42,760

Variable cost (3.57 * 34000) =    1,21,380

Contribution =    1,40,760

Fixed cost = 43,000

Net Operating Income = 78,380

b) Selling price decreased by $1.5 per unit and number of units sold increase by 17%-

Sales ( 4.50 * 39780) = 1,79,010

Variable cost (3 * 39780) =    1,19,340

Contribution = 59,670

Fixed cost = 43,000

Net Operating Income = 16,670

c) Selling price increased by $1.5 per unit, fixed cost increases by $ 10000 and number of units sold decrease by 7%-

Sales ( 7.50 * 31620) = 2,37,150

Variable cost (3 * 31620) = 94,860

Contribution = 1,42,290

Fixed cost = 53,000

Net Operating Income = 89,290

d) Selling price decreased by 20%, Variable cost increase by 20%and number of units sold decrease by 14%-

Sales ( 7.20 * 29240) = 2,10,528

Variable cost (3.6 * 29240)    =    1,05,264

Contribution = 1,05,264

Fixed cost = 43,000

Net Operating Income = 62,264