Question

Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs [LO5-1, LO5-4] Miller Company's contribution format income statement for the most recent month is shown below: Total 328,000 Per Unit 8.00 Sales (41,000 units) Variable expenses 205,000 5.00 Contribution margin 3.00 123,000 Fixed expenses 41,000 Net operating income 82,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 10%? 2. What is the revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 24%? 3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $6,000, 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 20 %, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 14%? 1 Net operating income 2. Net operating income |3 Net operating income 4 Net operating income

Answer 1

Sales Units 41000 Sales 328000 Variable Expneses 205000 Contribution Margin 123000 Fixed Cost 41,000 Net Operating income 82,000 Net Operatting income = (( Selling Price - Variable cost)* Units) - Fixed Expneses Answers Revised Net operating income If sales are increased by 10% Revised Net operating income (3))*41000*1.10-41000 94,300 Revised Net operating income If selling Price Decreased by $1.50 and Number of 2 Units Increased by 24% Revised Net operating income (6.5-5)*41000*1.24-41000 35,260 Selling price increased by 1.50, Fixed cost Increased by 6000 and units decreased 3 by2% Revised Net operating income (9.5-5)*41000*0.98-47000 133810 Selling price increased by 20% Variable cost by 30 Cents units decreased by 14% Revised Net operating income (10.6-5.3)*41000*0.86-41000 110618