Question

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (33,000 units)	$	231,000		$	7.00
Variable expenses		132,000			4.00
Contribution margin		99,000		$	3.00
Fixed expenses		45,000
Net operating income	$	54,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 18%?

2. What is the revised net operating income if the selling price decreases by $1.10 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 $1.10 per unit, fixed expenses increase by $10,000, 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 40 cents per unit, and the number of units sold decreases by 7%?

Answer 1

1
	Total
Sales	272,580
Variable expenses	155,760
Contribution Margin	116,820
Fixed expenses	45,000
Net operating income	71,820
2
	Total
Sales	227,799
Variable expenses	154,440
Contribution Margin	73,359
Fixed expenses	45,000
Net operating income	28,359
3
	Total
Sales	259,281
Variable expenses	128,040
Contribution Margin	131,241
Fixed expenses	55,000
Net operating income	76,241
4
	Total
Sales	257,796
Variable expenses	135,036
Contribution Margin	122,760
Fixed expenses	55,000
Net operating income	67,760