Question

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Miller Company's most recent income statement follows: Sales (18,000 units) Less: Variable expenses Per Uni $25 Tota $450,000 180,000 270,000 Contribution margin Less Fixed expenses 77,000 Net income $193,000 Required: 1. Prepare a new income statement if the sales volume increases by 25%, and the selling price decreases by $3.00. (Round "Per Unit" answers to 2 decimal places.) Per Unit Sales

Answer 1

1) Net Income if sales volume increase by 25% and selling price decrease by $ 3.00 Particulars Amount $ Per Unit Units Sales (18000*125%*(25-3)) 495,000 22.00 22,500 Less: Variable expenses 225,000 10.00 Contribution margin 270,000 12.00 Less: Fixed expenses 77,000 Net Income 193,000 2) Net Income if sales volume increase by 20% and selling price decrease by $ 3.00 Particulars Amount $ Per Unit Units Sales (18000*120%*(25-3)) 475,200 22.00 21,600 Less: Variable expenses 216,000 10.00 Contribution margin 259,200 12.00 Less: Fixed expenses 77,000 Net Income 182,200 Units 17,100 3) Net Income if sales volume decrease by 5%, selling price increase by $ 3 per unit and fixed expenses increase by $ 10,000/. :- Particulars Amount $ Per Unit Sales (18000*95%*(25-3)) 478,800 28.00 Less: Variable expenses 171,000 10.00 Contribution margin 307,800 18.00 Less: Fixed expenses (77000-10000) 87,000 Net Income 220,800 Units 15,300 4) Net Income if selling price increase by 5%, Variable expenses increase by 15 cents per unit and sales volume decrease by 15% Particulars Amount $ Per Unit Sales (18000*85%*(25*125%)) 478,125 31.25 Less: Variable expenses 157,590 10.30 Contribution margin 320,535 20.95 Less: Fixed expenses 77,000 Net Income 243,535