Question

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

	Total			Per Unit
Sales (36,000 units)	$	216,000		$	6.00
Variable expenses		108,000			3.00
Contribution margin		108,000		$	3.00
Fixed expenses		41,000
Net operating income	$	67,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 17%?

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 6%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 11%?

Answer 1