Question

Miller Company's contribution format income statement for the most recent month is shown below: Sales (44,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 352,000 220,000 132,000 46,000 $ 86,000 Per Unit $ 8.00 5.00 $3.00 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 17%? 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 $9,000, and the number of units sold decreases by 4%? 4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 13%? 1. Net operating income 2. Net operating income 3. Net operating income 4. Net operating income

Answer 1

Answer-

1	Net operating income	$108440
2	Net operating income	$45256
3	Net operating income	$126632
4	Net operating income	$22904

Explanation-Case 1-

Miller Company
Operating income
Particulars		Amount $
Sales	(44000 units*1.17)*$8 per unit	411840
Less:- Variable cost	51480 units*$5 per unit	257400
Contribution		154440
Less:- Fixed costs		46000
Net operating income		108440
Case 2-
Miller Company
Operating income
Particulars		Amount $
Sales	(44000 units*1.22)*($8 per unit-$1.30 per unit)	359656
Less:- Variable cost	53680 units*$5 per unit	268400
Contribution		91256
Less:- Fixed costs		46000
Net operating income		45256
Case 3-
Miller Company
Operating income
Particulars		Amount $
Sales	(44000 units*96%)*($8 per unit+$1.30 per unit)	392832
Less:- Variable cost	42240 units*$5 per unit	211200
Contribution		181632
Less:- Fixed costs	(46000+9000)	55000
Net operating income		126632
Case 4-
Miller Company
Operating income
Particulars		Amount $
Sales	(44000 units*87%)*($8 per unit*1.10)	336864
Less:- Variable cost	38280 units*($5 per unit*1.40)	267960
Contribution		68904
Less:- Fixed costs		46000
Net operating income		22904