Question

Miller Company's contribution format income statement for the most recent month is shown below: Sales (32,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 288,000 192,000 96,000 50,000 $ 46,000 Per Unit $ 9.00 6.00 $ 3.00 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 $1.20 per unit and the number of units sold increases by 19%? 3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $5,000, and the number of units sold decreases by 8%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 6%? 1. Net operating income 2. Net operating income 3. Net operating income 4. Net operating income

Answer 1

Answer
1	Total	Per unit
Sales	$     319,680	9
Variable expenses	$     213,120	6
Contribution margin	$     106,560	3
Fixed expenses	$       50,000
Net operating income	$       56,560
2	Total	Per unit
Sales	$     297,024	7.8
Variable expenses	$     228,480	6
Contribution margin	$       68,544	1.8
Fixed expenses	$       50,000
Net operating income	$       18,544
3	Total	Per unit
Sales	$     300,288	10.2
Variable expenses	$     176,640	6
Contribution margin	$     123,648	4.2
Fixed expenses	$       55,000
Net operating income	$       68,648
4	Total	Per unit
Sales	$     324,864	10.8
Variable expenses	$     234,624	7.8
Contribution margin	$       90,240	3
Fixed expenses	$       50,000
Net operating income	$       40,240