Question

Miller Company's most recent income statement follows: Sales (28,000 units) Less: Variable expenses Total $336,000 140,000 Per Unit $12 Contribution margin 196.000 $ Less: Fixed expenses 21,000 Net income $175,000 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.) Total Per Unit Sales Less: Variable expenses Contribution margin Less: Fixed expenses Net income

Answer 1

1.
New operating income statement if sales volume increases by 25% and selling price decreases by $3
	Total	Per unit
Sales (35,000 units)	$315,000	9	(12-3)
Less: Variable expenses	$175,000	5
Contribution margin	$140,000	4
Less: Fixed expenses	$21,000
Net income	$119,000
Volume	28000*1.25
Volume	35000
Total sales	315000	35000*9
Total variable expenses	175000	35000*5
2.
If selling price decrease by $1.5 and volume increases by 20%
	Total	Per unit
Sales (33,600 units)	$352,800	10.5	(12-1.50)
Less: Variable expenses	$168,000	5
Contribution margin	$184,800	5.5
Less: Fixed expenses	$21,000
Net income	$163,800
Volume	28000*1.20
Volume	33600
Total sales	352800	33600*10.5
Total variable expenses	168000	33600*5
3.
If selling price increase by $3, fixed expenses by $7,000 and sales volume decrease by 5%
	Total	Per unit
Sales (26,600 units)	$399,000	15	(12+3)
Less: Variable expenses	$133,000	5
Contribution margin	$266,000	10
Less: Fixed expenses	$28,000		(21000+7000)
Net income	$238,000
Volume	28000*(1-0.05)
Volume	26600
Total sales	399000	26600*15
Total variable expenses	133000	26600*5
4.
Selling price increase by 5%, variable expense increase by 25 cents per unit and sales volume decreases by 30%
	Total	Per unit
Sales (19,600 units)	$246,960	12.6	12*1.05
Less: Variable expenses	$102,900	5.25	(5+0.25)
Contribution margin	$144,060	7.35
Less: Fixed expenses	$21,000
Net income	$123,060
Volume	28000*(1-0.30)
Volume	19600
Total sales	246960	19600*12.6
Total variable expenses	102900	19600*5.25