Question

Miller Company’s contribution format income statement for the most recent month is shown below:

 

	Total			Per Unit
Sales (36,000 units)	$	216,000		$	6.00
Variable expenses		108,000			3.00
Contribution margin		108,000		$	3.00
Fixed expenses		49,000
Net operating income	$	59,000

 

Required:

(Consider each case independently):

 

1. What is the revised net operating income if unit sales increase by 20%?

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 22%?

3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 2%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 10 cents per unit, and the number of units sold decreases by 12%?