Question

Miller Company's most recent contribution format income statement is shown below: Per Total Total Unit Sales (37,000 $296,000 $8.00 units) Variable 185,000 5.00 expenses Contribution $3.00 margin Fixed 44,000 expenses Net operating S 67.000 income Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently)- (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.) 1. The number of units sold increases by 20%. Miller Company Contribution Income Statement Total Unit 2. The selling price decreases by $1.40 per unit, and the number of units sold increases by 18%. Miller Company Contribution Income Statement Total 3. The selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 5%. Miller Company Contribution Income Statement Per Total Unit 4. The selling price increases by 10%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 10%. Miller Company Contribution Income Statement Total Unit

Answer 1

1). Miller Company Contribution Margin Income statement Total Per Unit Sales (44,400 Units) $355,200 $ 8.00 variable Cost $222,000 $ 5.00 Contribution Margin $133,200 $ 3.00 Fixed Costs $ 44,000 Net Operating income $ 89,200 Units Increses by 20% = 37,000 +37,000* 20% =37,000+7,400 = 44,400 2). Miller Company Contribution Margin Income statement Total Per Unit Sales (42,920 Units) $283,272 $ 6.60 variable Cost $214,600 $ 5.00 Contribution Margin $ 68,672 $ 1.60 Fixed Costs $ 44,000 Net Operating income $ 24,672 Units Increses by 16% = 37,000-37000*16% = 42920 Selling price Decrease by $1.40 = $8-$1.4 = $6.6

Miller Company Contribution Margin Income statement Total Per Unit Sales (35,150 Units) $330,410 $ 9.4 variable Cost $175,750 $ 5.0 Contribution Margin $154.660 $ 4.4 Fixed Costs $ 52,000 Net Operating income $102,660 Selling Price Increases by $1.4 = $8.00+$1.40 – $9.40 Fixed expenses increases by $8,000 = $44,000+$8,000 - $52,000 No of Units sold Decreses by 5% = 37,000-37,000*5% = 35,150 Miller Company Contribution Margin Income statement Total Per Unit Sales (33,300 Units) $293,040 $ 8.8 variable Cost $173,160 $ 5.2 Contribution Margin $119.880 $ 3.6 Fixed Costs $ 44,000 Net Operating income $ 75,880 Selling Price Increse by 10% = $8-$8*10% - $8.80 Variable expensse Increses by $0.20cents per Unit - $5+$0.20 - $5.20 Units sold Decreses by 10% = 37,000-37,000*10% = 33,300