Question

Miller Company's contribution format income statement for the most recent month is shown below: Total $ 320,000 200,000 Sales (40,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Per Unit $8.00 5.00 $3.00 120,000 49,000 $ 71,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 15%? 2. What is the revised net operating income if the selling price decreases by $1.40 per unit and the number of units sold increases by 20%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 3%? 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%?

Answer 1

Sales Units 40000 Sales 320000 Variable Expneses 200000 Contribution Margin 120000 Fixed Cost 49,000 Net Operating income 71,000 Net Operatting income = (( Selling Price -Variable cost)* Units) - Fixed Expneses Answers Revised Net operating income If sales are increased by 15% Revised Net operating income (3))*40000*1.15-49000 89,000 Revised Net operating income If selling Price Decreased by $1.40 and Number of 2 Units Increased by 20% Revised Net operating income (3-1.4)*40000*1.20-47000 27,800 Selling price increased by 1.40, Fixed cost Increased by 6000 and units decreased 3 by 3% Revised Net operating income (3+1.40*40000*0.97-55000 1,15,720 Selling price increased by 20% Variable cost by 20 Cents ,units decreased by 14% Revised Net operating income (9.6-5.20)*40000*0.90-47000 1,02,360