Question

Miller Company's contribution format income statement for the most recent month is shown below. Total Per Unit $180.000 3.00 Sales (30,000 units) Variable expenses Contribution margin Pixed expenses Net operating income 90.000 90.000 48,000 42,000 $ 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 17%? 3. What is the revised net operating income if the selling price increases by $1.20 per unit, foxed expenses increase by $9,000, 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 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 6%? Answer is complete but not entirely correct. Net operating Net operating Net Operating Net operating

Answer 1

Sales Increase by 139. [33,980 units) Total pea vast Sales (30000 x 113%) anits $203 400 86 Vartable expense (30000 x 1137) units $101700 ß3 Contribution Murgia 10170063 fixed expenses $48000 Ner operating Income $53, 7oo. Revised Net operating Income & 53700 Selling Price decrease be log per unit and No of Cold Inchease by 17% Sales Price will be a 6-1.2 = 84-8 Per unit No. of units will bez 30000 x 1179 2 35 100 unite Total Per unit sales (3roounits) 9168480 $9.8 variable expenses 105300 & 3 Contribution margin 63180 $ 1.8 fired expenses $48000 Net operating Income 15180 Revised Net operating frome - $18180. a sellig Price Increar by lig fer un't quel Aixed expenses Increase by soon and No of uail sold decrease by a Selling Price & Current Pricef canoease in Price

Selling Price 2 6 + 1.2 & 7.2 / unit No. of unit sold = 30000 - 34. & 99, 100 units. - Total per unit sales (29100 unit) & 209520 7.2 Variable expenses 87,300 Contribution margin & 122, 220 4.2 fixed expense 057000 I $65,220 Revised ovet operating Iu come a $65220 to selling Price Increase by 104. Vanable expense increase by 30 - and No. of usit sold decrease by by Selling Price = 6X 1.102) 6.6 Per unit variable expense ? 3 403 ) 3.9 unit Number of unit Sold = 30000 -6%. 2) 98200 units. Total fer uait Sales (28200 walls) 1 8 186120 6.6 Variable expenses Contribution margin $76140 fired Expenses $ 48000 109980 Net operating Tu come $28140 Note: - in Variable expenses are changed with the Number of unit sold fired expense remain unchanged. change are