Question

Miller Company's most recent contribution format income statement is shown below: Total $370,000 259,000 Per Unit $10.00 Sales (37,000 units) Variable expenses 7.00 Contribution margin $3.00 111,000 Fixed expenses 47,000 64,000 Net operating income Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.) 1. The number of units sold increases by 16% Miller Company Contribution Income Statement Total Per Unit 0.00 0 0

Answer 1

	Total	Per unit
Sales	370,000	10
Variable Expenses	259,000	7
Contribution Margin	111,000	3
Fixed Expenses	47,000
Net Operating Income	64,000
1.Units sold increases by 16%
	Total	Per unit
Sales	429,200	10
Variable Expenses	300,440	7
Contribution Margin	128,760	3
Fixed Expenses	47,000
Net Operating Income	81,760
2.Selling price decreases by $1.20, number of units increases by 19%
	Total	Per unit
Sales	387,464	8.8
Variable Expenses	308,210	7
Contribution Margin	79,254	1.8
Fixed Expenses	47,000
Net Operating Income	32,254
3.Selling Price increases by $1.20 per unit, Fixed expenses increase by $8000, Number of units decrease by 2%
	Total	Per unit
Sales	406,112	11.2
Variable Expenses	253,820	7
Contribution Margin	152,292	4.2
Fixed Expenses	55,000
Net Operating Income	97,292
4.Selling Price increase by 20%, Variable expense by 10 cents, units sold decrease by 12%
	Total	Per unit
Sales	390,720	12
Variable Expenses	231,176	7.1
Contribution Margin	159,544	4.9
Fixed Expenses	47,000
Net Operating Income	112,544