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Miller Company's contribution format income statement for the moss recent month is shown below $ 208,mo 292,000 $ $
Miller Company's contribution format income statement for the moss recent month is shown below
$ 208,mo 292,000 $ $.00 9.00 132,000 91,00o $ 2.00
Require:I: (Consider each case independently):
1. What is the revised net operating income if unit sales increase by 11%2 2. What is the revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold increases by 24%2 3. What is the revised net operafing income if the selling price increases by $1.20 per unit, fixed expenses increase by $6,000, antl the number of units sold decreases 1,330 4. What is the revised net operafing income if the selling price per unit increases by 20% variable expenses increase by 30 cents per unit, and the number of units sold decreases by WV
Expert Solution
1) The number of units sold increased by 11%:
| Miller Company | |
| Contribution Income Statement | |
| Particulars | Amount ($) |
| Sales [(44,000 units*(1+11%)*$7) | 341880 |
| Less: Variable Expenses [(44,000 units*(1+11%)*$4) | 195360 |
| Contribution Margin | 146520 |
| Less: Fixed Expenses | 41000 |
| Net Operating Income | 105520 |
2) The selling price decreases by $1.20 per unit, and the number of units sold increases by 24%.
| Miller Company | |
| Contribution Income Statement | |
| Particulars | Amount ($) |
| Sales [(44,000 units*(1+24%)*($7-$1.20)) | 316448 |
| Less: Variable Expenses [(44,000 units*(1+24%)*$4) | 218240 |
| Contribution Margin | 98208 |
| Less: Fixed Expenses | 41000 |
| Net Operating Income | 57208 |
3) The selling price increases by $1.20 per unit, fixed expenses increase by $6,000, and the number of units decreases by 3%.
| Miller Company | |
| Contribution Income Statement | |
| Particulars | Amount ($) |
| Sales [(44,000 units*(1-3%)*($7+$1.20)) | 349976 |
| Less: Variable Expenses [(44,000 units*(1-3%)*$4) | 170720 |
| Contribution Margin | 179256 |
| Less: Fixed Expenses ($41,000+$6,000) | 47000 |
| Net Operating Income | 132256 |
4) The selling price increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 8%.
| Miller Company | |
| Contribution Income Statement | |
| Particulars | Amount ($) |
| Sales [(44,000 units*(1-8%)*($7*(1+0.20)) | 340032 |
| Less: Variable Expenses [(44,000 units*(1-8%)*($4+0.30)) | 174064 |
| Contribution Margin | 165968 |
| Less: Fixed Expenses | 41000 |
| Net Operating Income | 124968 |
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