Question

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (44,000 units)	$	396,000		$	9.00
Variable expenses		264,000			6.00
Contribution margin		132,000		$	3.00
Fixed expenses		47,000
Net operating income	$	85,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 13%?

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 18%?

3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 5%?

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 13%?

1. Net Operation Income:

2. Net Operation Income:

3. Net Operation Income:

4. Net Operation Income:

Answer 1

1)
	Sale units	(44000*113%)=			49720
	contribution margin per unit				3
	total contribution margin				149160
	less:fixed expense				47,000
	Net operating income				102,160
2)
	Sale units	(44000*118%)=			51920
	contribution margin per unit			(3-1.20)=	1.8
	total contribution margin				93456
	less:fixed expense				47,000
	Net operating income				46,456
3)
	Sale units	(44000*95%)=			41800
	contribution margin per unit			(3+1.20)=	4.2
	total contribution margin				175560
	less:fixed expense				53,000
	Net operating income				122,560
4)	Selling price per unit		(9*120%)=		10.8
	varible expense		(6+.40)		6.4
	contribution margin per unit				4.4
	Sale units	(44000*87%)=			38280
	contribution margin per unit				4.4
	total contribution margin				168432
	less:fixed expense				47,000
	Net operating income				121,432