Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, an
ID: 2340631 • Letter: E
Question
Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs [LO5-1, LO5-4]
Miller Company’s contribution format income statement for the most recent month is shown below:
Required:
(Consider each case independently):
1. What is the revised net operating income if unit sales increase by 15%?
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 20%?
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 8%?
4. What is the revised net operating 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 12%?
Total Per Unit Sales (36,000 units) $ 252,000 $ 7.00 Variable expenses 144,000 4.00 Contribution margin 108,000 $ 3.00 Fixed expenses 49,000 Net operating income $ 59,000Explanation / Answer
1) Sale units (36000*115%)= 41400 contribution margin per unit 3 total contribution margin 124200 less:fixed expense 49,000 Net operating income 75,200 2) Sale units (36000*120%)= 43200 contribution margin per unit (3-1.30)= 1.7 total contribution margin 73440 less:fixed expense 49,000 Net operating income 24,440 3) Sale units (36000*92%)= 33120 contribution margin per unit (3+1.30)= 4.3 total contribution margin 142416 less:fixed expense 58,000 Net operating income 84,416 4) Selling price per unit (7*120%)= 8.4 varible expense (4+.30) 4.3 contribution margin per unit 4.1 Sale units (36000*88%)= 31680 contribution margin per unit 4.1 total contribution margin 129888 less:fixed expense 49,000 Net operating income 80,888
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