Miller Company\'s contribution format income statement for the most recent month

Question

Miller Company's contribution format income statement for the most recent month is shown below: Per Unit $ 5.00 2.00 $ 3.00 Total Sales (43,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 215,000 86,000 129,000 43,000 $ 86,000 Required: (Consider each case independently): 1, what is the revised net operating income if unit sales increase by 18%? 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 20%? 3. What is the revised net operating income if the selling price increases by $1.20 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 20 cents per unit, and the number of units sold decreases by 7%? 1. Net operating income109,220 2. Net operating income 3. Net operating income 4. Net operating income

Explanation / Answer

$ 1 If unit sale is increased by 18%, net operating income Revised contribution margin ( 43,000 units x 1.18 x $ 3 per unit )                152,220 Less: Fixed expenses                (43,000) Net operating income                109,220 2 Revised selling price per unit ( $ 5 - $ 1.20 )                      3.80 Less: Variable expenses                     (2.00) Revised contribution margin per unit                      1.80 Number units sold ( 43,000 units x (1+0.20)) = 51,600 units Revised contribution margin ( 51,600 units x $ 1.80 )                  92,880 Less: Fixed expenses                (43,000) Net operating income                  49,880 3 Revised selling price per unit ( $ 5 + $ 1.20 )                      6.20 Less: Variable expenses                     (2.00) Revised contribution margin per unit                      4.20 Number units sold ( 43,000 units x (1-0.04)) = 41,280 units Revised contribution margin ( 41,280 units x $ 4.2 )                173,376 Less: Fixed expenses ( $43,000 + $ 9,000 )                (52,000) Net operating income                121,376 4 Revised selling price per unit ( $ 5 x 1.10 )                      5.50 Less: Variable expenses ( $ 2 + $ 0.20)                     (2.20) Revised contribution margin per unit                      3.30 Number units sold ( 43,000 units x (1-0.07)) = 39,990 units Revised contribution margin ( 39,990 units x $ 3.3 )                131,967 Less: Fixed expenses                (43,000) Net operating income                  88,967

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