Question

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

	Total			Per Unit
Sales (42,000 units)	$	336,000		$	8.00
Variable expenses		210,000			5.00
Contribution margin		126,000		$	3.00
Fixed expenses		49,000
Net operating income	$	77,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 18%?

2. What is the revised net operating income if the selling price decreases by $1.10 per unit and the number of units sold increases by 23%?

3. What is the revised net operating income if the selling price increases by $1.10 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 2%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

Answer 1

Answer:-1)-

Miller Company
Net opreating income
Particulars		Amount
Sales	(42000units*118%)*$8 per unit	396480
Less:- Variable expenses	49560 units*$5 per unit	247800
Contribution margin		148680
Less:-Fixed costs		49000
Net opreating income		99680

2)-

Miller Company
Net opreating income
Particulars		Amount
Sales	(42000units*123%)*$8 per unit-$1.10 per unit	356454
Less:- Variable expenses	51660 units*$5 per unit	258300
Contribution margin		98154
Less:-Fixed costs		49000
Net opreating income		49154

3)-

Miller Company
Net opreating income
Particulars		Amount
Sales	(42000units*98%)*$8 per unit-$1.10 per unit	284004
Less:- Variable expenses	41660 units*$5 per unit	208300
Contribution margin		75704
Less:-Fixed costs	$49000-$10000	39000
Net opreating income		36704

4)-

Miller Company
Net opreating income
Particulars		Amount
Sales	(42000units*88%)*$8 per unit*110%	325248
Less:- Variable expenses	36960 units*($5 per unit*130%)	240240
Contribution margin		85008
Less:-Fixed costs		49000
Net opreating income		36008