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In: Accounting

Shown here are condensed income statements for two different companies (both are organized as LLCs and...

Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).

Miller Company
Sales $ 1,000,000
Variable expenses (80%) 800,000
Income before interest 200,000
Interest expense (fixed) 60,000
Net income $ 140,000
Weaver Company
Sales $ 1,000,000
Variable expenses (60%) 600,000
Income before interest 400,000
Interest expense (fixed) 260,000
Net income $ 140,000

Problem 9-5A Part 5

5. What happens to each company’s net income if sales increase by 80%? (Round your answers to nearest whole percent.)

Company Net Income
Miller Co. Increase or decrease? __________    %
Weaver Co. Increase or decrease? __________ %

6. What happens to each company’s net income if sales decrease by 10%? (Round your answers to nearest whole percent.)

Company Net Income
Miller Co. Increase or decrease? __________    %
Weaver Co. Increase or decrease? __________ %

7. What happens to each company’s net income if sales decrease by 20%? (Round your answers to nearest whole percent.)

Company Net Income
Miller Co. Increase or decrease? __________    %
Weaver Co. Increase or decrease? __________ %

8. What happens to each company’s net income if sales decrease by 40%? (Round your answers to nearest whole percent.)

Company Net Income
Miller Co. Increase or decrease? __________    %
Weaver Co. Increase or decrease? __________ %

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Expert Solution

ekkarill92 answered 1 month ago
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