Miller Company\'s most recent contribution format income statement is shown belo
ID: 2353725 • Letter: M
Question
Miller Company's most recent contribution format income statement is shown below:sales (30,000 units)............150,000 15.00
Variable expenses.............90,000 3.00
CM ..............................60,000 2.00
Fixed expense................. 50,000
Net operating income......... 10,000
Required:
Prepare a new contribution format income statement under each of the following conditions (consider each case independently):
1.
The number of units sold increases by 15%.
2.The selling price decreases by 50 cents per unit, and the number of units sold increases by 20%.
3.The selling price increases by 50 cents per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 5%.
4.The selling price increases by 12%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 10%.
Explanation / Answer
Income Statement
(Contribution Approach) Amount
Sales { 20000+(20000×15%)} $345000
(-) Variable Expenses (23000×$9) 207000
Contribution Margin 138000
(-) Fixed Expenses 70000
Net operating income 58000
(Contribution Approach) Amount
Sales { 20000+(20000×25%)} × ($15-1.50) $337500
(-) Variable Expenses (25000×$9) 225000
Contribution Margin 112500
(-) Fixed Expenses 70000
Net operating income 42500
(Contribution Approach) Amount
Sales { 20000-(20000×5%)} × ($15+1.50) $313500
(-) Variable Expenses (19000×$9) 171000
Contribution Margin 142500
(-) Fixed Expenses ($70000+$20000) 90000
Net operating income 52500
(Contribution Approach) Amount
Sales { 20000-(20000×10%)} × ($15+15×12%) $302400
(-) Variable Expenses {18000×($9+0.6) 172800
Contribution Margin 129600
(-) Fixed Expenses 70000
Net operating income 59600