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:

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 $1.10 per unit and the number of units sold increases by 23%?

3. What is the revised net operating income if the selling price increases by $1.10 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 2%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

Total Per Unit Sales (42,000 units) $ 336,000 $ 8.00 Variable expenses 210,000 5.00 Contribution margin 126,000 $ 3.00 Fixed expenses 49,000 Net operating income $ 77,000

Explanation / Answer

1 Total Per unit Sales (49,560 units) 396480 8 Variable expenses 247800 5 Contribution margin 148680 3 Fixed expenses 49000 Net operating income 99680 2 Total Per unit Sales (51,660 units) 356454 6.9 Variable expenses 258300 5 Contribution margin 98154 1.9 Fixed expenses 49000 Net operating income 49154 3 Total Per unit Sales (41,160 units) 374556 9.1 Variable expenses 205800 5 Contribution margin 168756 4.1 Fixed expenses 59000 Net operating income 109756 4 Total Per unit Sales (36,960 units) 325248 8.8 Variable expenses 195888 5.3 Contribution margin 129360 3.5 Fixed expenses 49000 Net operating income 80360

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