Question

1. What is the revised net operating income if unit sales increase by 16%?

Miller Company's contribution format income statement for the most recent month is shown below: Total $ 360,000 225,000 Sales (45,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Per Unit $ 8.00 5.00 $ 3.00 135,000 47,000 88,000 $

2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 21%?

3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $5,000, and the number of units sold decreases by 7%?

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 14%?

Answer 1

Variable cost varies with the sales while fixed cost remains constant
	Total	Per unit
Sales	417,600	8
Variable expenses	261,000	5
Contribution margin	156,600	3
Fixed expenses	47,000
Net operating income	109,600
Operating Income = $109,600
2
	Total	Per unit
Sales	364,815.00	6.7
Variable expenses	272,250.00	5
Contribution margin	92,565.00	3
Fixed expenses	47,000.00
Net operating income	45,565.00
Operating Income = $45,565
3
	Total	Per unit
Sales	389,205.00	9.3
Variable expenses	209,250.00	5
Contribution margin	179,955.00	3
Fixed expenses	52,000.00
Net operating income	127,955.00
Operating Income = $127,955
4
	Total	Per unit
Sales	371,520.00	9.6
Variable expenses	201,240.00	5.2
Contribution margin	170,280.00	3
Fixed expenses	47,000.00
Net operating income	123,280.00
Operating Income = $123,280