Question

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

   Total Per Unit

Sales (33,000 units) $330,000 $10.00

Variable expenses 231,000 7.00

Contribution margin 99,000    $3.00

Fixed expenses    40,000

Net operating income $ 59,000

Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.)

1. The number of units sold increases by 16%.

2. The selling price decreases by $1.20 per unit, and the number of units sold increases by 17%.

3. The selling price increases by $1.20 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 7%.

4. The selling price increases by 10%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 8%.

Answer 1

Existing Position:

Income statement
	Total	Per unit
Sales	$ 330,000	$ 10.00
Less: variable Cost	$ 231,000	$   7.00
Contribution	$   99,000	$   3.00
Less: Fixed Cost	$   40,000	$   1.21
Net Income	$   59,000	$   1.79

Answer 1

Income statement
	Total	Per unit
Sales	$ 382,800	$ 10.00
Less: variable Cost	$ 267,960	$   7.00
Contribution	$ 114,840	$   3.00
Less: Fixed Cost	$   40,000	$   1.04
Net Income	$   74,840	$   1.96

Answer 2

Income statement
	Total	Per unit
Sales	$ 339,768	$   8.80
Less: variable Cost	$ 270,270	$   7.00
Contribution	$   69,498	$   1.80
Less: Fixed Cost	$   40,000	$   1.04
Net Income	$   29,498	$   0.76

Answer 3

Income statement
	Total	Per unit
Sales	$ 343,728	$ 11.20
Less: variable Cost	$ 214,830	$   7.00
Contribution	$ 128,898	$   4.20
Less: Fixed Cost	$   50,000	$   1.63
Net Income	$   78,898	$   2.57

Answer 4

Income statement
	Total	Per unit
Sales	$ 333,960	$ 11.00
Less: variable Cost	$ 255,024	$   8.40
Contribution	$   78,936	$   2.60
Less: Fixed Cost	$   40,000	$   1.32
Net Income	$   38,936	$   1.28

In case of any doubt, please comment.