Miller Company\'s most recent contribution format income statement is shown belo
ID: 2465395 • Letter: M
Question
Miller Company's most recent contribution format income statement is shown below:
1.The number of units sold increases by 11%.
2.The selling price decreases by $1.40 per unit, and the number of units sold increases by 16%.
3.The selling price increases by $1.40 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 6%.
Total Per Unit Sales (31,000 units) $279,000 $9.00 Variable expenses 186,000 6.00 Contribution margin 93,000 $3.00 Fixed expenses 45,000 Net operating income $ 48,000 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 11%.
2.The selling price decreases by $1.40 per unit, and the number of units sold increases by 16%.
3.The selling price increases by $1.40 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 6%.
4. The selling price increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 6%.Explanation / Answer
Sales (31,000@111%) 9
$309,690
Less: Variable expense ( 34,410 *6)
206,460
Contribution margin
103,230
Less: fixed expense
45,000
Net operating income
58,230
(2)
Sales (31,000@116%) 7.60
273,296
Less :Variable expense 35,960 *6
215,760
Contribution margin
57,536
Less: fixed expense
45,000
Net operating income
12,536
(3)
Sales (31,000@94%)10.40
303,056
Less:Variable expense 29,140 *6
174,840
Contribution margin
128,216
Less :fixed expenses
51,000
Net operating income
77,216
(4)
Sales (29,140 )9.90
288,486
Less :Variable expense 29,140 *6.30
183,582
Contribution margin
104,904
Less:Fixed expense
45,000
Net operating income
59,904
Sales (31,000@111%) 9
$309,690
Less: Variable expense ( 34,410 *6)
206,460
Contribution margin
103,230
Less: fixed expense
45,000
Net operating income
58,230