meduduökcomytlow/connect.html Chapter 5 Homework 7 Exercise 5-13 Changes in Sell
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meduduökcomytlow/connect.html Chapter 5 Homework 7 Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs LO5-1, LO5-4] 1.1 Miller Company's contribution format income statement for the most recent month is shown below pped Total Per Unit Sales (32,ee0 units) Variable expenses Contribution margin Fixed expenses Net operating income $256, 000 $8.08 16e,ee95.08 96,e $3.00 44,800 52,080 Required: Consider each case independently): 1. What is the revised net operating income ifunit sales increase by 11%? 2. What is the revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold lincreases by 17%? 3. What is the revised net operating income if the selling price increases by $120 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 3%? References 4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 10 cents per unit, and the number of units sold decreases by 14%? 1. Net operaing income 2. Net operaing income 3. Net operating income Net operating incomeExplanation / Answer
SOLUTION
1. New sales units = Existing units * 111%
= 32,000 units * 111% = 35,520 units
Contribution format income statement
2. New selling price = Existing selling price - Decrease in selling price
= $8.00 - $1.20 = $6.80
New sales units = Existing units * 117%
= 32,000 units * 117% = 37,440 units
Contribution format income statement
3. New selling price = Existing selling price + Increase in selling price
= $8.00 + $1.20 = $9.20
New sales units = Existing units * 97%
= 32,000 units * 97% = 31,040 units
New fixed expenses = Existing fixed expense + increase of $10,000
= $44,000 + $10,000 = $54,000
Contribution format income statement
4. New sales units = Existing units * 96%
= 32,000 units * 96% = 30,720 units
New selling price = Existing selling price * 110%
= $8 * 110% = $8.80
New variable expense = Existing variable expense * 110%
= $5 * 110% = $5.5
Contribution format income statement
Particulars Amount ($) Sales revenue (35,520 * $8) 284,160 Less: Variable expense (35,520 * $5) (177,600) Contribution margin 106,560 Less: Fixed expense (44,000) Net operating income 62,560Related Questions
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