Question

Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs (LO5-1, LO5-4) Meer Company's contribution format income statement for the most recent month is shown below. Per Unit $10.00 Sales (33.000 nits) Variable expenses Contribution margin Fixed expenses perating con Required: (Consider each case independently 1 What is the revised net operating income funit sales increase by 10%? 2 What is the revised net operating income of the selling price decreases by $150 per unit and the number of units sold increases by 3. What is the revised net operating income if the selling price increases by $150 per unit, fed expenses increase by $10,000, and the number of units sold decreases by 5 4. What is the revised net operating income of the selling price per unit increases by 20% variable expenses increase by 40 cents per unit, and the number of units sold decreases by 6%

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer Part 1) Statement of Revised Net Operating income Particulars Amount Sales (32000*110%*10) 352000 Variable cost (32000*7*1.1) 246400 Contribution margin 105600 fixed cost 49000 Net operating income 56600 Part 2) Statement of Revised Net Operating income Particulars Amount Sales (32000*118%*8.5) 320960 Variable cost (32000*7*118%) 264320 Contribution margin 56640 fixed cost 49000 Net operating income 7640

Part 3) Statement of Revised Net Operating income Particulars Amount Sales (32000*95%*11.5) 349600 Variable cost (32000*7*95%) 212800 Contribution margin 136800 fixed cost 59000 Net operating income 77800 Part 4) Statement of Revised Net Operating income Particulars Amount Sales (32000*94%*12) 360960 Variable cost (32000*94%*7*140%) 294784 Contribution margin 66176 fixed cost 49000 Net operating income 17176 Thus the final answer 56600 1 Net operating income 2 Net operating income 3 Net operating income 4 Net operating income 7640 77800 17176