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? __________	%

Solutions

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ekkarill92 answered 2 hours ago

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