Question

Miler Company's most recent contribution format income statement is shown below 333,000 $9.00 600 53.00 Sales (37,000 unas) Variable expenses Contribution margin Fixed expenses Net operating income 222,000 111,000 49,000 $ 62,000 Required Prepare a new contribution format income statement under each of the follovwing condtions (consider each case independenty) (De not round intermediate calculations your "Per unit" answers to 2 decimal places.) I. The number of units sold increases by 17% Contribution Income Statement

Answer 1

1. Number of units sold increases by 17%.

Revised sales units = Current sales unit * ( 100 % + % increase ) = 37,000 units * ( 100% + 17% ) = 37,000 units * 117% = 43,290 units

	Total	Per unit
Sales (43,290 units)	$389,610	$9
Variable expenses	$259,740	$6
Contribution margin	$129,870	$3
Fixed expenses	$49,000
Net operating income	$80,870

2. The selling price decreases by $1.10 per unit, and the number of units sold increases by 17%

Revised selling price = Current selling price - Decrease = $9 - $1.10 = $7.90

Revised sales unit = Current sales units * ( 100% + % increase ) = 37,000 units * ( 100% + 17% ) = 43,290 units

	Total	Per unit
Sales (43,290 units)	$341,991	$7.90
Variable expenses	$259,740	$6
Contribution margin	$82,251	$1.90
Fixed expenses	$49,000
Net operating income	$33,251

3. The selling price increases $1.10 per unit, fixed expenses increases by $9,000, and the number of units sold decreases by 3%

Revised selling price = Current selling price + Increase = $9 + $1.10 = $10.10

Revised fixed expenses = Current fixed expenses + Increase = $49,000 + $9,000 = $58,000

Revised sales unit = Current sales units * ( 100% - % decrease ) = 37,000 units * ( 100% - 3% ) = 35,890 units

	Total	Per unit
Sales (35,890 units)	$362,489	$10.10
Variable expenses	$215,340	$6
Contribution margin	$147,149	$4.10
Fixed expenses	$58,000
Net operating income	$89,149

4. The selling price increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 13%

Revised selling price = Current selling price * ( 100% + % increase ) = $9 * ( 100% + 20% ) = $10.80

Revised variable expenses = Current variable expenses + Increase = $6 + $0.20 = $6.20

Revised sales unit = Current sales units * ( 100% - % decrease ) = 37,000 units * ( 100% - 13% ) = 32,190 units

	Total	Per unit
Sales (32,190 units)	$347,652	$10.80
Variable expenses	$199,578	$6.20
Contribution margin	$148,074	$4.60
Fixed expenses	$49,000
Net operating income	$99,074