Question

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (36,000 units) $ 252,000 $ 7.00 Variable expenses 144,000 4.00 Contribution margin 108,000 $ 3.00 Fixed expenses 44,000 Net operating income $ 64,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 11%? 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 18%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $7,000, 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 20 cents per unit, and the number of units sold decreases by 13%?

Answer 1

Unit Sales	36,000
Revenue	252,000	7
Variable expenses	144,000	4
Contribution Margin	108,000	3
Fixed costs	44,000
Net Operating Income	64,000
1.Operating income	75,880
2.Operating Income	23,968
3.Operating Income	102,648
4.Operating income	65,620

A В C 1 2 Unit Sales 3 Revenue 4 Variable expenses 36000 252000 144000 4 5 Contribution Margin 6 Fixed costs B3-B4 ЕС3-С4 44000 7 Net Operating IncomeB5-B6 9 1.0perating income 10 2.0perating Income 11 3.Operating Income 12 4.Operating income -C5*B2*1.11-B6 (C5-1.4) B2*1.18-B6 (C5+1.4)*B2*97%-B6-7000 (C5+0.7-0.2)*B2*87%-B6